UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)


þ ☑	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2016~~2019


¨ ☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

~~COMMISSION FILE NO.~~ Commission File Number. 001-32876

WYNDHAM ~~WORLDWIDE CORPORATION~~DESTINATIONS, INC.

(Exact name of ~~registrant~~Registrant as ~~specified~~Specified in ~~its charter)~~Its Charter)



~~DELAWARE~~Delaware		20-0052541
(State or ~~other jurisdiction~~Other Jurisdiction of ~~incorporation~~Incorporation or ~~organization)~~Organization)		(I.R.S. Employer Identification No.)

~~22 SYLVAN WAY~~6277 Sea Harbor Drive		~~07054~~32821
~~PARSIPPANY, NEW JERSEY~~Orlando,	Florida	(Zip Code)
(Address of ~~principal executive offices)~~Principal Executive Offices)

~~(973) 753-6000~~(407) 626-5200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



		Name of each exchange
Title of each Class	Trading Symbol	on which registered
Common Stock ~~Par Value $0.01 per share~~	WYND	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yesþ☑ No ¨☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨☐Noþ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ☑ No ¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yesþ☑ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~



Large accelerated filer	þ☑	Accelerated filer	¨☐
Non-accelerated filer	¨☐
		Smaller reporting company	¨☐

~~(Do not check if a smaller~~ ~~reporting company)~~		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨☐ No þ☑

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 30, ~~2016,~~2019, was ~~$7,718,053,995.~~$3,931,629,510. All executive officers and directors of the registrant have been deemed, solely for the purpose of the foregoing calculation, to be “affiliates” of the registrant.

As of January 31, ~~2017,~~2020, the registrant had outstanding ~~104,978,938~~87,302,399 shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of ~~the~~our Proxy Statement prepared for ~~the 2017~~our 2020 Annual Meeting of Shareholders are incorporated by reference into Part III (Items 10, 11, 12, 13 and 14) of this ~~report.~~report.

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TABLE OF CONTENTS



		Page
	PART I
Item 1.	Business	23
Item 1A.	Risk Factors	2422
Item 1B.	Unresolved Staff Comments	3233
Item 2.	Properties	3233
Item 3.	Legal Proceedings	3234
Item 4.	Mine Safety Disclosures	3234
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	33
~~Item 6.~~	~~Selected Financial Data~~	35
Item 6.	Selected Financial Data	37
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3739
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	6457
Item 8.	Financial Statements and Supplementary Data	6559
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	65115
Item 9A.	Controls and Procedures	65115
Item 9B.	Other Information	65115
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	66116
Item 11.	Executive Compensation	67116
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	67116
Item 13.	Certain Relationships and Related Transactions, and Director Independence	67117
Item 14.	Principal Accounting Fees and Services	67117
	PART IV
Item 15.	Exhibits, ~~and~~ Financial Statement Schedules	68118
Item 16.	Form 10-K Summary	123
	Signatures	69124

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GLOSSARY OF TERMS

The following terms and acronyms appear in the text of this report and have the definitions indicated below:

Adjusted EBITDA

A non-GAAP measure, defined by the Company as Net income before Depreciation and amortization, Interest expense (excluding Consumer financing interest), Early extinguishment of debt, Interest income (excluding Consumer financing revenues) and income taxes. Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, transaction costs, impairments, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent.


AOCL	Accumulated Other Comprehensive Loss


ARDA	American Resort Development Association


ARN	Alliance Reservations Network


AUD	Australian Dollar


Board	Board of Directors


CCPA	California Consumer Privacy Act of 2018


Code	Internal Revenue Code of 1986


Company	Wyndham Destinations, Inc. and its subsidiaries


Compass	Compass IV Limited, an affiliate of Platinum Equity, LLC


Distribution	Pro rata distribution of Wyndham Hotels’ stock to Wyndham Destinations’ shareholders


Distribution Date	May 31, 2018, the date we completed the Spin-off of our hotel business


EPS	Earnings Per Share


Exchange Act	Securities Exchange Act of 1934


FASB	Financial Accounting Standards Board


FICO	Fair Isaac Corporation


FTC	Federal Trade Commission


GAAP	Generally Accepted Accounting Principles in the United States


GDPR	General Data Protection Regulation


IRS	United States Internal Revenue Service


IRS Ruling	A private letter ruling from the IRS regarding certain U.S. federal income tax aspects of transactions related to the Spin-off of Wyndham Hotels & Resorts, Inc.


La Quinta	La Quinta Holdings Inc.


LIBOR	London Interbank Offered Rate


Moody’s	Moody’s Investors Service, Inc.


NQ	Non-Qualified stock options


NYSE	New York Stock Exchange


NZD	New Zealand Dollar


PCAOB	Public Company Accounting Oversight Board


PSU	Performance-vested restricted Stock Units


RSU	Restricted Stock Unit


S&P	Standard & Poor’s Rating Services


SEC	Securities and Exchange Commission


SOFR	Secured Overnight Financing Rate


SPE	Special Purpose Entity


SpinCo Assets	The assets that have been retained by or transferred to Wyndham Hotels & Resorts, Inc.


SpinCo Liabilities	The liabilities that have been retained by or transferred to Wyndham Hotels & Resorts, Inc.


Spin-off	Spin-off of Wyndham Hotels & Resorts, Inc.


SSAR	Stock-Settled Appreciation Rights


U.S.	United States of America


USD	United States of America Dollar


U.S. tax reform	Tax Cuts and Jobs Act


Vacasa	Vacasa LLC


VIE	Variable Interest Entity


VOCR	Vacation Ownership Contract Receivable


VOI	Vacation Ownership Interest


VPG	Volume Per Guest


Wyndham Hotels	Wyndham Hotels & Resorts, Inc.


Wyndham Destinations	Wyndham Destinations, Inc.


Wyndham Worldwide	Wyndham Worldwide Corporation

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PART I

Forward Looking Statements

This report includes ~~“forward-looking” statements,~~“forward-looking statements” as that term is defined by the Securities and Exchange Commission (“SEC”) ~~in its rules, regulations and releases.~~. Forward-looking statements are any statements other than statements of historical fact, including statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as “may,” “will,” “expects,” “should,” “believes,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” ~~“continue”~~“continue,” “future” or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results of Wyndham Destinations, Inc. and its subsidiaries (“Wyndham Destinations,” the “Company” or “we”) to differ materially from those discussed in, or implied by, the forward-looking statements. Factors that might cause such a difference include, but are not limited to, general economic conditions, ~~our~~the performance of the financial and credit markets, the competition in and the economic environment for the timeshare industry, the impact of war, terrorist activity, political strife, severe weather events and other natural disasters, pandemics or threats of pandemics, operating risks associated with the vacation ownership and vacation exchange businesses, uncertainties related to our ability to realize the anticipated benefits of the spin-off of the hotel business ~~prospects,~~(“Spin-off”) Wyndham Hotels & Resorts, Inc. (“Wyndham Hotels”) or the divestiture of our ~~capital requirements,~~North American and European vacation rentals businesses or the acquisition of Alliance Reservations Network (“ARN”), unanticipated developments related to the impact of the Spin-off, the divestiture of our ~~financing prospects,~~North American and European vacation rentals businesses, the acquisition of ARN and related transactions, including any potential impact on our relationships with ~~associates~~our customers, suppliers, employees and others with whom we have relationships, and possible disruption to our operations, our ability to execute on our strategy, the timing and amount of future dividends and share repurchases and those other factors disclosed as risks under “Risk Factors” in documents we have filed with the SEC, included in Part I, Item 1A of this report. We caution readers that any such statements are based on currently available operational, financial and competitive information, and they should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made. Except as required by law, we ~~disclaim any~~undertake no obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.

Where You Can Find More Information

We file annual, quarterly and current reports, proxy statements, reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and other information with the SEC. Our SEC filings are available free of charge to the public over the Internet at the SEC’s website at http://~~www.sec.gov~~.www.sec.gov. Our SEC filings are also available on our website at http://~~www.WyndhamWorldwide.com~~www.WyndhamDestinations.com as soon as reasonably practicable after they are filed with or furnished to the SEC. You may also read and copy any filed document at the SEC’s public reference room in Washington, D.C. at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about public reference rooms.

We maintain an internet site at http://~~www.WyndhamWorldwide.com~~.www.WyndhamDestinations.com. Our website and the information contained on or connected to that site are not incorporated into this Annual Report.

ITEM 1. BUSINESS

~~OVERVIEW~~

~~Wyndham Worldwide~~Company Overview

We are ~~one of~~ the world’s largest ~~hospitality companies, offering~~vacation ownership and exchange company. We offer everyday travelers ~~a wide range of hospitality services~~the opportunity to own, exchange or rent their vacation experience while enjoying the quality, flexibility and ~~products through our~~value that we deliver. Our global portfolio of world-renowned brands. The hospitality industry is a major component of the travel industry, which is one of the largest retail industry segments of the global economy. Our portfolio of brands have a significant presence in ~~many major hospitality markets in~~approximately 110 countries means more vacation choices for our over four million members and owner families, with 230 resorts that offer a contemporary take on the ~~United States and throughout the world and are uniquely positioned to provide travelers access to a large assortment of travel accommodations and destinations. Our~~timeshare model - including vacation club brands ~~include:~~Club Wyndham, ~~Hotels and Resorts, Ramada, Days Inn, Super 8, Howard Johnson, Wingate~~WorldMark by Wyndham, ~~Microtel Inns & Suites~~and Margaritaville Vacation Club by Wyndham ~~TRYP~~- and over 4,200 affiliated resorts through RCI, the world’s leader in vacation exchange.

Recent Developments

Alliance Reservations Network Acquisition

On August 7, 2019, we acquired Alliance Reservations Network (“ARN”), for $102 million ($97 million net of cash acquired). ARN provides private-label travel booking technology solutions. This acquisition was made to accelerate growth at RCI by ~~Wyndham, Dolce Hotels~~increasing the offerings available to its members and ~~Resorts, RCI, Landal GreenParks, Novasol, Hoseasons, cottages.com, James Villa Holidays, Wyndham~~affiliates. We have recognized the assets and liabilities of ARN based on estimates of their acquisition date fair values. ARN is reported within the Vacation Exchange segment.

North American Vacation Rentals Business Sale

During 2018, Wyndham ~~Vacation Resorts, Shell Vacations Club~~Destinations decided to explore strategic alternatives for its North American vacation rentals business, and ~~WorldMark by Wyndham.~~ on October 22, 2019, completed the sale of this business to Vacasa LLC (“Vacasa”) for $162 million. The assets and

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liabilities of this business were classified as held-for-sale on the December 31, 2018 Consolidated Balance Sheet. This business did not meet the criteria to be classified as a discontinued operation; therefore, the results of operations through the date of sale are reflected within continuing operations on the Consolidated Statements of Income. For further details see Note 7—Held-for-Sale Business to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Continuing Operations

Our continuing operations are grouped into ~~three~~two segments: ~~hotel group, destination network and vacation ownership.~~

~~Wyndham Hotel Group~~ is the world’s largest hotel company based on the number of properties, with 8,035 hotels and over 697,600 hotel rooms worldwide. We franchise in the upscale, upper midscale, midscale, economy and extended stay segments with a concentration in economy brands. We also provide property management services for full-service and select limited-service hotels. This is predominantly a fee-for-service business that produces recurring revenue streams with steady cash flow and low capital investment requirements.

~~Wyndham Destination Network~~ is the world’s largest provider of professionally managed, unique vacation accommodations based on the number of accommodations. We have the world’s largest vacation exchange network with 3.8 million members. Our overall network has over 121,000 vacation accommodations, located in over 110 countries and territories and includes cottages, villas, chalets, vacation ownership condominiums, fractional resorts, second homes, yachts, private residence clubs, traditional hotel rooms and city apartments. This is primarily a fee-for-service business that provides stable revenue streams and produces strong cash flow.

~~Wyndham Vacation Ownership~~ is the world’s largest timeshare (also known as vacation ownership) business based on the number of resorts, units, owners and revenues, with 219 resorts and over 887,000 owners. We develop and market

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Vacation Ownership ~~Interests (“VOIs”) to individual consumers, provide consumer financing in connection with the sale of VOIs~~ and ~~provide property management services at resorts.~~Vacation Exchange (formerly, Exchange & Rentals).


•	Vacation Ownership is the world’s largest timeshare business with 230 resorts and 878,000 owners. We develop and market vacation ownership interests (“VOIs”) to individual consumers, provide consumer financing in connection with the sale of VOIs, and provide property management services at resorts.


•	Vacation Exchange operates the world’s largest vacation exchange network with 3.9 million members. Our vacation exchange business has relationships with over 4,200 vacation ownership resorts located in approximately 110 countries and territories. This is primarily a Fee-for-Service business that provides stable revenue streams and produces strong cash flow.

Our business segments generate a diversified revenue stream and ~~high free~~significant cash flow. ~~Approximately 63%~~We generate 46% of our revenues are generated from our fee-for-service businesses. We derive our revenues from (i) franchise fees received from hotels for use of our brand names and providing marketing and reservation activities, (ii) providing property management services to hotels and vacation ownership resorts, (iii) providing vacation exchange and rentals services and (iv) providing services under our Wyndham Asset Affiliation Models (“WAAM”) in our timeshare business. The remainder of our revenue comes primarily from the sale of VOIs, and ~~related financing.~~

~~How we create value for~~40% of our ~~shareholders~~

~~Our mission is~~revenues from our Fee-for-Service businesses. We derive our fee revenues principally from (i) providing property management services to increase shareholder value by offering the widest ranges of places to stay thereby allowing customers to experience travel the way they want. Our collective brands provide travelers with more than 129,000 places to stay in over 110 countries and territories on six continents. Our strategies to achieve these objectives are to:

~~Strategically allocate capital to expand our fee-for-service business models;~~

~~Increase cash flow and profitability through superior execution;~~

~~Develop innovative~~vacation ownership resorts, (ii) providing vacation exchange services, and ~~products to meet the evolving needs of customers; and~~(iii) providing services under our Fee-for-Service model in our timeshare business.

~~Further develop our world class capabilities by strengthening our brands, attracting and developing the best talent and investing in technology.~~

We provide value-added services and products and also support and promote green and diversity initiatives to enhance the travel experience of the individual consumer and to drive revenues to our business customers.

~~All of our~~Our businesses have both domestic and international operations. During ~~2016,~~2019, we derived ~~76%~~87% of our revenues in the United States of America (“U.S.”) and ~~24% internationally (approximately~~ 13% ~~in Europe and 11% in all other international regions).~~internationally. For ~~a discussion of~~further details on our segment revenues, profits, assets and geographical operations, see Note 2124—Segment Information to the Consolidated Financial Statements included in Part II, Item 8 of this Annual ~~Report.~~Report on Form 10-K.

Business Strategy

Our Wyndham Destinations strategic pillars serve to clarify our top priorities in order to enhance shareholder value and return capital to our shareholders through share repurchases and dividends. The four Strategic Pillars affirm our mindset that customers must dominate our focus, while also reflecting our relentless drive for superior sales and marketing, exceptional brands and products, as well as our commitment to operate all areas of the business with excellence.

Our execution of this strategy is firmly anchored by our culture - the foundation comprised of the shared values, competencies, and spirit of our global team. Aligned with our vision to put the world on vacation, our values are the HEART of Wyndham Destinations: Hospitality, Engagement, Accountability, Respect, Teamwork. We recognize and appreciate our ability to positively impact the lives of our customers, associates, and the communities in which we operate. Wyndham Destinations thrives upon the commitment of its 22,500 associates, and we strive to foster a culture that unlocks our full potential for success as a company, and as individual and team contributors.


1.	Customer Obsession

Far beyond a hospitality initiative,Customer Obsessionis our global credo that the Wyndham Destinations team puts affiliates, owners, members, and guests first in all areas of our business. Three straightforward guidelines support this focus and underscore our commitment to excellence in customer service:


•	Make It Easy reminds us of the fact that simple is better. Not only will it be easy to do business with us, but we will also pursue synergies within the company that benefit our customers. The alignment of our team, systems, and operations enables us to deliver better customer experiences.


•	Know Our Customers reflects our priority to understand customer preferences, personalize engagement, and fulfill expectations. By leveraging integrated data to tailor the content and channels of customer communications, we will customize connections at every opportunity.


•	Customer, Customer, Customer is all about keeping the customer at the center of our focus. Our commitment to listen and respond to feedback ensures that the voice of the customer drives our decisions.

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2.	Best-in-Class Sales & Marketing

This strategy focuses on fueling the continued growth of Wyndham Destinations. We will remain globally relevant to travelers by staying committed to innovation and continuing to build and strengthen relationships with our customers. Four core elements define our goals and align with our pledge to treat all customers with respect and integrity:


•	Blue Thread is our connection to Wyndham Hotels and Wyndham Rewards loyalty program customers. The demographics of this significant consumer group are strongly aligned to our owner demographics, enabling us to fill our sales pipeline and deliver new vacation experiences to Wyndham loyalists.


•	Partnership Pipelineenables us to leverage the expertise of strategic partners to accelerate our growth and deliver enhanced benefits to our owners and members. We will strengthen and extend existing relationships, while developing new partners to reach untapped segments.


•	Digital & Customer Relationship Marketingwill bring timeshare to the next generation. We will optimize technology to be relevant and compelling to meet our customers’ expectations and we will infuse transparency, speed, and accuracy into our processes.


•	Sales Experiencerelates to the evolution of the places and processes that mark the journey of ownership. We will invest in bold transformations to revitalize the customer experience and drive customer engagement about vacations.


3.	Leading Brands & Offerings

This strategy is about creating a simple yet powerful narrative of who we are and what we sell. This effort began with the launch of Wyndham Destinations and continues with the refreshed branding of Club Wyndham and WorldMark by Wyndham. Three core elements define this strategy:


•	Brand Transformationshows our commitment to become even better at articulating the value proposition of each of our brands and making them relevant and enticing to our diverse owners, members, and prospects.


•	Network Expansion means growing our portfolio to meet the needs of our customers. Not only is this about adding more locations, it’s also about keeping our products and services refreshed and cutting edge.


•	RCI Re-ignitionwill focus on expanding the business into the broader travel market to become a leading travel membership provider, and leveraging RCI’s legacy of innovation, technology, and analytics to deliver more travel opportunities to our members.


4.	Operating Excellence

This strategy is the business engine that enables our delivery of great vacations and optimal performance through aligned operations. Two core elements drive this strategy:


•	Resort Operating Excellence sustains our ability to provide great vacation experiences to our owners, members and guests. The strategic deployment of capital and reserves to maintain top quality resorts, combined with our optimal use of inventory, drives this cycle of excellence.


•	Prioritization reflects our disciplined operation as an integrated company. Our alignment around prioritized work and our management of general, administrative and overhead expenses relative to revenue growth fuels efficiency and effectiveness.

In summary, we believe that the successful execution of our business strategy will allow us to increase cash flows and profitability, creating more value for our shareholders.

History and Development

Our corporate history can be traced back to the formation of Hospitality Franchise Systems (“HFS”) in 1990. HFS initially began as a hotel franchisor that later expanded to include the addition of the vacation exchange business. In December 1997, HFS merged with CUC International, Inc. to form Cendant Corporation, which then expanded further ~~expanded with~~through the addition of ~~the~~ vacation rentals and vacation ownership businesses. On July 31, 2006, Cendant distributed all of the shares of its subsidiary, Wyndham Worldwide Corporation (“~~Wyndham” or the “Company”~~Wyndham Worldwide”), to the holders of Cendant common ~~stock issued and outstanding as of July 21, 2006 (the record date for the distribution). The separation was effective on July 31, 2006.~~stock. On August 1, 2006, we commenced “regular way” trading on the New York Stock Exchange (“NYSE”) under the symbol “WYN”.

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On May 31, 2018, the “Distribution Date,” we completed the Spin-off of our hotel business into a separate publicly traded company, Wyndham Hotels & Resorts, Inc. (“Wyndham Hotels”). This transaction was effected through a pro rata distribution of the new hotel entity’s stock to Wyndham Destinations shareholders (the “Distribution”). In connection with the Spin-off, we entered into certain agreements with Wyndham Hotels to implement the legal and structural separation, govern the relationship between us and Wyndham Hotels up to and after the completion of the separation, and allocate various assets, liabilities and obligations, including, among other things, employee benefits, intellectual property, and tax-related assets and liabilities between us and Wyndham Hotels. The two public companies have ~~many widely recognized~~entered into long-term exclusive license agreements to retain their affiliations with one of the industry’s top-rated loyalty programs, Wyndham Rewards, as well as to continue to collaborate on inventory-sharing and ~~well-established brands. Our Howard Johnson and Ramada brands opened their first hotels in 1954.~~ customer cross-selling initiatives.

RCI, our vacation exchange business, was established in 1974. ~~Hoseasons, Landal GreenParks and Novasol, some of Europe’s most renowned vacation rental brands, were established in 1944, 1954 and 1968, respectively.~~ Our vacation ownership brands began operations in 1978 with Shell Vacations Club, followed by Wyndham Vacation Resorts (formerly known as Fairfield Resorts) in 1980, and WorldMark by Wyndham (formerly known as Trendwest Resorts) in 1989.

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Our portfolio of well-known hospitality brands was assembled over the past ~~twenty-seven~~30 years. The following is a timeline of some of our acquisitions:

1990 1992 1993 1996
Howard Johnson Days Inn Super 8 Resort Condominiums International (RCI)
Ramada (US) Travelodge North America
2001 2002 2004 2005
Wyndham Vacation Resorts WorldMark by Wyndham Landal GreenParks Wyndham Hotels and Resorts
Holiday Cottages Group Novasol Ramada International
Cuendet
2006 2008 2010 2011
Baymont Inn and Suites Microtel Inns and Suites by Wyndham Hoseasons The Resort Company
Hawthorn Suites by Wyndham ResortQuest Bahama Bay/Caribe Cove
James Villa Holidays
TRYP by Wyndham
2012 2013 2014 2015
Shell Vacations Club Midtown 45, NYC Property Raintree Vacation Club (5 Properties) Dolce Hotels and Resorts
Wyndham Grand Rio Mar Hotel Cumbrian Cottages Shoal Bay Resort Vacation Palm Springs
Oceana Resorts Hatteras Realty, Inc. Sea Pearl Resorts
Smoky Mountain Property Management ResortQuest Whistler
2016
Fen Hotels
Blue Chip Holidays
Dayz ApS



Year		Acquisition
1996		Resort Condominiums International (RCI)
2001		Wyndham Vacation Resorts
2002		WorldMark by Wyndham
		Equivest
2012		Shell Vacations Club
2013		Midtown 45, NYC Property
2014		Raintree Vacation Club (5 Properties)
2017		Love Home Swap
		DAE Global Pty Ltd
2019		Alliance Reservations Network

BUSINESS DESCRIPTIONS

The following is a description of ~~each of~~ our ~~three~~two business segments, ~~Wyndham Hotel Group, Wyndham Destination Network~~Vacation Ownership and ~~Wyndham~~ Vacation ~~Ownership,~~Exchange, and the industries in which they compete.

~~WYNDHAM HOTEL GROUP~~VACATION OWNERSHIP

~~Hotel~~ Industry

~~Regions~~

The ~~global~~vacation ownership industry, also referred to as the timeshare industry, enables consumers to share ownership of a fully-furnished vacation accommodation. Typically, the consumer purchases either a title to a fraction of a unit or a right to use a property for a specific period of time. This is referred to as a vacation ownership interest (“VOI”). VOIs are generally sold through weekly interval or points-based systems. Under a weekly interval system, owners can use a specific unit at a specific resort often during a specific week of the year. Under a points-based system, owners often have advance reservation rights for a particular destination, but are free to redeem their points for various unit types and/or locations. In addition, points owners can vary the length and frequency of product utilization. Once point values are established for particular units, they generally cannot be changed. For many purchasers, vacation ownership is an attractive alternative to traditional lodging accommodations at hotels. In addition to avoiding variability in room rates, timeshare owners also enjoy accommodations that are, on average, more than twice the size and typically have more features than traditional hotel ~~market consists of approximately 172,000 hotels with combined annual revenues of approximately $468 billion. This represents over 16.2 million~~ rooms, such as kitchens, separate living areas, and in-unit laundry.

Typically, developers sell VOIs for a fixed purchase price that is paid in full at closing or financed through developer-offered financing options. Vacation ownership resorts are often operated by a property owners’ association of which ~~approximately 54%~~the VOI owners are members. Most property owners’ associations are governed by a board of directors that includes owners and which may include representatives of the developer. The board of the property owners’ association typically delegates much of the responsibility for managing the resort to a management company, which is often affiliated with ~~a brand. The market is geographically concentrated with~~ the ~~top 20 countries accounting for over 81% of total rooms.~~developer.

~~The regional distribution~~After the initial purchase, most vacation ownership programs require the owner to pay an annual maintenance fee. This fee represents the owner’s allocable share of the ~~hotel industry consists~~costs and expenses of operating and maintaining the ~~following (according to Smith Travel Research Global (“STR”)):~~vacation ownership property

Room Supply Revenues Brand
Region Hotels (millions) (billions) Affiliation
United States/Canada 60,289
5.5
$ 161
70 %
Europe 61,206
4.5
142
40 %
Asia Pacific 33,082
4.3
110
52 %
Latin America/Middle East 17,345
1.9
55
43 %

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~~Business Models~~and providing program services. This fee typically covers expenses such as housekeeping, landscaping, taxes, insurance, resort labor, a management fee payable to the management company, and an assessment to fund a reserve account used to renovate, refurbish and replace furnishings, appliances, common areas and other assets, such as structural elements and equipment, as needed over time. Owners typically reserve their usage of vacation accommodations in advance through a reservation system. These reservation systems are often provided by the management company or an affiliated entity.

~~Companies~~

Market awareness and acceptance of vacation ownership products has grown with the entrance into the market of well-known lodging and entertainment brands, such as Wyndham, Marriott, Hilton, and Disney. Additionally, the industry’s growth can also be attributed to stronger consumer protection laws and the evolution from primarily weekly intervals systems to points-based systems. According to the American Resort Development Association (“ARDA”), a trade association representing the vacation ownership and resort development industries, industry-wide sales were divided 80.1% for points-based systems and 19.9% for weekly intervals in 2018.

Based on published industry data, the primary reasons owners have expressed for buying and continuing to own their timeshare are as follows:

saving money on future vacation costs;

location of resorts;

overall flexibility by allowing them the ability to use different locations, unit types, and times of year;

certainty of vacations; and

certainty of quality accommodations.

According to a 2019 report issued by ARDA, domestic vacation ownership sales were $10.2 billion in 2018, compared to $9.6 billion in 2017. Demographic factors explain, in part, the continued appeal of vacation ownership. A 2018 study of recent U.S. vacation ownership purchasers indicated that the average timeshare owner is 44 years old and has an average annual household income of $86,000. More than half of the respondents indicated they plan to buy or upgrade a timeshare over the next two years. This, along with other industry data, suggests that the typical purchaser in the ~~hotel~~U.S. has disposable income and is interested in purchasing vacation products. Although we believe baby boomers will continue to be active participants in the vacation ownership industry, ~~operate primarily under one~~a 2016 study notes that 41% of the ~~following business models:~~respondents were Gen X’ers and 26% were Millennials and that the average age of new first-time purchasers was 43 years old with an average household income of $88,000. The data also suggests that Millennials’ perception of the industry and primary reasons for buying their timeshare is similar to the overall population of owners; however, they seek even more flexibility in using and accessing the product. Most owners can exchange their timeshare unit through exchange companies and through the applicable vacation ownership company’s internal network of properties.

Vacation Ownership Overview

~~Franchise~~ ~~- Under~~We operate the ~~franchise model, a company typically grants~~world’s largest vacation ownership business. We develop and acquire vacation ownership resorts, market and sell VOIs, provide consumer financing for the ~~use~~majority of ~~a brand name~~the sales, and provide property management services to a hotel owner in exchange for royalty fees that are typically a percentage of room sales. Since the royalty fees are a recurring revenue stream and the cost structure is relatively low, the franchise model yields high margins and steady, predictable cash flows.property owners’ associations. As of December 31, ~~2016,~~2019, we had ~~7,923 franchised properties~~230 vacation ownership resorts in the U.S., Canada, Mexico, Caribbean, and Asia Pacific that represent nearly 26,000 individual vacation ownership units and 878,000 owners of VOIs.

Our brands primarily operate points-based vacation ownership systems through which VOIs can be redeemed for vacations that provide owners with flexibility as to resort location, length of stay, number of stays, unit type, and time of year. Our programs allow us to market and sell our ~~hotel portfolio.~~

vacation ownership products in variable quantities and to offer existing owners “upgrade” sales to supplement their existing VOIs. Less than one percent of our VOI product sales are from traditional weekly interval systems.

~~Vacation Ownership~~


•	Vacation Ownership—develops, markets and sells vacation ownership interests (“VOIs”) to individual consumers, provides consumer financing in connection with the sale of VOIs, and provides property management services at resorts.


•	Vacation Exchange—provides vacation exchange services and products to owners of VOIs.

European Vacation Rentals Business Sale

We sold our European vacation rentals business on May 9, 2018. This sale resulted in final net proceeds of $1.06 billion and a 2018 after-tax gain of $456 million, net of $139 million in taxes. During 2019, we recognized an additional $18 million gain, related to $12 million of tax benefits associated with additional foreign tax credit utilization and lower than anticipated state income taxes, as well as $6 million in returned escrow for an expired guarantee and other changes in expired guarantees. We have provided post-closing credit support in order to ensure that Compass IV Limited, an affiliate of Platinum Equity, LLC (“Compass”) meets the requirements of certain service providers and regulatory authorities. The results of operations of this business through the date of sale have been classified as discontinued operations on the Consolidated Financial Statements.

Hotel Business Spin-off

We completed the spin-off of our hotel business on May 31, 2018 (“Spin-off”). This Spin-off resulted in our operations being held by two separate, publicly traded companies, Wyndham Destinations, Inc. (“Wyndham Destinations”) and Wyndham Hotels & Resorts, Inc. (“Wyndham Hotels”). The two public companies have entered into long-term exclusive license agreements to retain their affiliations with one of the industry’s top-rated loyalty programs, Wyndham Rewards, as well as to continue to collaborate on inventory-sharing and customer cross-sell initiatives. This transaction is expected to result in enhanced strategic and management focus on the core business and growth of each company; more efficient capital allocation, direct access to capital and expanded growth opportunities for each company; the ability to implement a tailored approach to recruiting and retaining employees at each company; improved investor understanding of the business strategy and operating results of each company; and enhanced investor choice by offering investment opportunities in separate entities. This transaction was effected through a pro rata distribution of the new hotel entity’s stock to existing Wyndham Destinations shareholders. The new hotel company was named Wyndham Hotels. As a result of the Spin-off, we have classified the results of operations of our hotel business as discontinued operations on the Consolidated Financial Statements.

Alliance Reservations Network Acquisition

On August 7, 2019, we acquired Alliance Reservations Network (“ARN”) for $102 million ($97 million net of cash acquired). ARN provides private-label travel booking technology solutions. This acquisition was made to accelerate growth at RCI by increasing the offerings available to its members and affiliates. We have recognized the assets and liabilities of ARN based on estimates of their acquisition date fair values. ARN is reported within the Vacation Exchange segment.

North American Vacation Rentals Business Sale

During 2018, we decided to explore strategic alternatives for the North American vacation rentals business and on October 22, 2019, we closed on the sale of this business for $162 million. The assets and liabilities of this business were classified as held-for-sale on the December 31, 2018 Consolidated Balance Sheet. This business did not meet the criteria to be classified as a discontinued operation; therefore, the results of operations through the date of sale are reflected within continuing operations on the Consolidated Statements of Income.

La Quinta Acquisition

In January 2018, we entered into an agreement with La Quinta Holdings Inc. (“La Quinta”) to acquire its hotel franchising and management businesses for $1.95 billion. At the time we entered into this agreement, we obtained financing commitments of $2.0 billion in the form of an unsecured bridge term loan, which was subsequently replaced with net cash proceeds from the issuance of $500 million unsecured notes, a $1.6 billion term loan and a $750 million revolving credit facility, which was undrawn. This acquisition closed on May 30, 2018, prior to the Spin-off on May 31, 2018. Upon completion of the Spin-off, La Quinta became a wholly-owned subsidiary of Wyndham Hotels and the associated debt was transferred to Wyndham Hotels.

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Tax Cuts and Jobs Act

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was enacted in the Unites States of America (“U.S.”). This law, also commonly referred to as “U.S. tax reform,” significantly changed U.S. corporate income tax laws by, among other changes, imposing a one-time mandatory tax on previously deferred earnings of foreign subsidiaries, reducing the U.S. corporate income tax rate from 35% to 21% starting on January 1, 2018, creating a territorial tax system which generally eliminates U.S. federal income taxes on dividends from foreign subsidiaries, eliminating or limiting the deduction of certain expenses, and requiring a minimum tax on earnings generated by foreign subsidiaries. The Tax Cuts and Jobs Act significantly impacted our effective tax rate, cash tax expenses and deferred income tax balances.

SEGMENT OVERVIEW

Vacation Ownership

We develop, market and sell VOIs to individual consumers, ~~provides~~provide consumer financing in connection with the sale of VOIs, and ~~provides~~provide property management services at resorts.

Our sales of VOIs are either cash sales or developer-financed sales. Developer financed sales are typically collateralized by the underlying VOI. Revenue is recognized on VOI sales upon transfer of control, which is defined as the point in time when a binding sales contract has been executed, the financing contract has been executed for the remaining transaction price, the statutory rescission period has expired, and the transaction price has been deemed to be collectible.

~~Separation from Cendant~~

~~On July 31, 2006, Cendant Corporation, currently known as Avis Budget Group, Inc. (or “former Parent”), distributed all~~For developer-financed sales, we reduce the VOI sales transaction price by an estimate of uncollectible consideration at the time of the ~~shares~~sale. Our estimates of ~~Wyndham common stock~~uncollectible amounts are based largely on the results of our static pool analysis which relies on historical payment data by customer class.

In connection with entering into a VOI sale, we may provide our customers with certain non-cash incentives, such as credits for future stays at our resorts. For those VOI sales, we bifurcate the sale and allocate the sales price between the VOI sale and the non-cash incentive. Non-cash incentives generally have expiration periods of 18 months or less and are recognized at a point in time upon transfer of control.

We provide day-to-day property management services including oversight of housekeeping services, maintenance, and certain accounting and administrative services for property owners’ associations and clubs. These services may also include reservation and resort renovation activities. Such agreements are generally for terms of one year or less, and are renewed automatically on an annual basis. Our management agreements contain cancellation clauses, which allow for either party to cancel the agreement, by either a majority board vote or a majority vote of non-developer interests. We receive fees for such property management services which are collected monthly in advance and are based upon total costs to operate such resorts (or as services are provided in the case of resort renovation activities). Fees for property management services typically approximate 10% of budgeted operating expenses. We are entitled to consideration for reimbursement of costs incurred on behalf of the property owners’ association in providing the management services (“reimbursable revenue”). These reimbursable costs principally relate to the ~~holders~~payroll costs for management of ~~Cendant common stock issued~~the associations, club and ~~outstanding~~resort properties where we are the employer and are reflected as a component of Operating expenses on ~~July 21, 2006,~~ the ~~record date~~Consolidated Statements of Income. We reduce management fees for amounts paid to the property owners’ association that reflect maintenance fees for VOIs for which we retain ownership, as we have concluded that such payments are consideration payable to a customer.

Property management fee revenues are recognized when the services are performed and are recorded as a component of Service and membership fees on the Consolidated Statements of Income. Property management revenues, which are comprised of management fee revenue and reimbursable revenue, were $702 million, $665 million, and $649 million during 2019, 2018, and 2017. Management fee revenues were $394 million, $314 million, and $285 million during 2019, 2018, and 2017. Reimbursable revenues were $308 million, $351 million, and $364 million during 2019, 2018, and 2017. One of the associations that we manage paid our Vacation Exchange segment $29 million for exchange services during each of the years 2019, 2018, and 2017.

Within our Vacation Ownership segment, we measure operating performance using the following key operating statistics: (i) gross VOI sales including Fee-for-Service sales before the effect of loan loss provisions, (ii) tours, which represents the number of tours taken by guests in our efforts to sell VOIs, and (iii) volume per guest (“VPG”), which represents revenue per guest and is calculated by dividing the gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) by the number of tours.

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Vacation Exchange

As a provider of vacation exchange services, we enter into affiliation agreements with developers of vacation ownership properties to allow owners of VOIs to trade their intervals for intervals at other properties affiliated with our vacation exchange network and, for some members, for other leisure-related services and products.

Our vacation exchange business derives a majority of revenues from membership dues and fees for facilitating members’ trading of their intervals. Revenues from membership dues represent the fees paid by members or affiliated clubs on their behalf. We recognize revenues from membership dues paid by the member on a straight-line basis over the membership period as the performance obligations are fulfilled through delivery of publications, if applicable, and by providing access to travel-related products and services. Estimated net contract consideration payable by affiliated clubs for memberships is recognized as revenue over the term of the contract with the affiliated club in proportion to the estimated average monthly member count. Such estimates are adjusted periodically for changes in the actual and forecasted member activity. For additional fees, members have the right to exchange their intervals for intervals at other properties affiliated with our vacation exchange networks and, for certain members, for other leisure-related services and products. We also derive revenue from facilitating bookings of travel accommodations for both members and non-members. Revenue is recognized when these transactions have been confirmed, net of expected cancellations.

Our vacation exchange business also derives revenues from programs with affiliated resorts, club servicing, and loyalty programs; and additional exchange-related products that provide members with the ability to protect trading power or points, extend the life of deposits, and combine two or more deposits for the ~~distribution. On August 1, 2006,~~opportunity to exchange into intervals with higher trading power. Other vacation exchange related product fees are deferred and recognized as revenue upon the occurrence of a future exchange, other related transaction or event.

Prior to the sale of our vacation rental businesses, we ~~commenced “regular way” trading~~derived revenue from fees associated with the rental of vacation properties managed and marketed by Wyndham Destinations, Inc. on behalf of independent owners. We remitted the ~~New York Stock~~rental fee received from the renter to the independent owner, net of our agreed-upon fee. The related revenue from such fees, net of expected refunds, was recognized over the renter’s stay. Our vacation rental businesses also derived revenues from additional services delivered to independent owners, vacation rental guests, and property owners’ associations which were generally recognized when the service was delivered.

Within our Vacation Exchange ~~under~~segment, we measure operating performance using the ~~symbol “WYN.”~~

~~Before~~following key operating statistics: (i) average number of vacation exchange members, which represents paid members in our ~~separation from Cendant (“Separation”), we entered into separation, transition~~vacation exchange programs who are current on their annual membership dues, or within the allowed grace period, and are entitled, for additional fees, to exchange their intervals for intervals at other properties affiliated with our exchange network and, for certain members, for other leisure-related services and ~~several~~products, and (ii) exchange revenue per member, which represents total revenue from fees associated with memberships, exchange transactions, and other ~~agreements~~services for the period divided by the average number of vacation exchange members during the period.

Other Items

In December 2019, a strain of coronavirus was reported to have surfaced in China, resulting in travel bans invoked against Chinese residents. These travel bans, as well as cancellations by non-Chinese customers due to concerns of the virus, have caused minor impacts to our operations in South Asia and Australia to date. Our annual revenues in South Asia and Australia represent approximately 6% of our total revenues. Although the impact has been minor to date, the extent to which the coronavirus may impact our financial condition or results of operations is uncertain. We will continue to monitor events closely and work with ~~Cendant, Realogy~~heath authorities to ensure the safety of our owners, guests, and ~~Travelport~~employees.

We record property management services revenues and RCI Elite Rewards revenues for our Vacation Ownership and Vacation Exchange segments in accordance with the guidance for reporting revenues gross as a principal versus net as an agent, which requires that these revenues be recorded on a gross basis.

Discussed below are our consolidated results of operations and the results of operations for each of our reportable segments. These reportable segments represent our operating segments for which discrete financial information is available and which are utilized on a regular basis by our chief operating decision maker to ~~effect~~assess performance and to allocate resources. In identifying the reportable segments, we also consider the nature of services provided by our operating segments. Management uses net revenues and Adjusted EBITDA to assess the performance of the reportable segments. We define Adjusted EBITDA as Net income before Depreciation and amortization, Interest expense (excluding Consumer financing interest), Early extinguishment of debt, Interest income (excluding Consumer financing revenues) and income taxes. Adjusted EBITDA also excludes stock-based compensation costs, separation and ~~distribution, govern the relationships among the parties after the separation~~restructuring costs, transaction costs, impairments, gains and allocate among the parties Cendant’s assets, liabilities and obligations attributable to periods prior to the separation. Under the Separation and Distribution Agreement, we assumed 37.5% of certain contingent and other corporate liabilities of Cendant or its subsidiaries which were not primarily related to our business or the businesses of Realogy, Travelport or Avis Budget Group, and Realogy assumed 62.5% of these contingent and other corporate liabilities. These include liabilities relating to Cendant’s terminated or divested businesses, the Travelport salelosses on August 22, 2006, taxes of Travelport for taxable periods through the date of the Travelport sale, certain litigation matters, generally any actions relating to the separation plan and payments under certain contracts that were not allocated to any specific party in connection with the Separation.sale/

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disposition of business, and items that meet the conditions of unusual and/or infrequent. We believe that Adjusted EBITDA is a useful measure of performance for our segments which, when considered with the Generally Accepted Accounting Principles in the U.S. (“GAAP”) measures, we believe gives a more complete understanding of our operating performance. Our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

OPERATING STATISTICS

The table below presents our operating statistics for the years ended December 31, 2019 and 2018. These operating statistics are the drivers of our revenues and therefore provide an enhanced understanding of our businesses. Refer to the Results of Operations section for a discussion on how these operating statistics affected our business for the periods presented.



	Year Ended December 31,
	2019		2018		% Change ^(g)
Vacation Ownership ^(a)
Gross VOI sales (in millions) ^{(b) (h)}	$	2,355	$	2,271	3.7
Tours (in 000s) ^(c)	945		904		4.5
Volume Per Guest (“VPG”) ^(d)	$	2,381	$	2,392	(0.4)
Vacation Exchange ^(a)
Average number of members (in 000s) ^(e)	3,887		3,847		1.0
Exchange revenue per member ^(f)	$	166.54	$	171.04	(2.6)


^(a)	Includes the impact from acquisitions from the acquisition dates forward.


^(b)	Represents total sales of VOIs, including sales under the Fee-for-Service program, before the effect of loan loss provisions. We believe that Gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.


^(c)	Represents the number of tours taken by guests in our efforts to sell VOIs.

^(d)

VPG is calculated by dividing Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) by the number of tours. Tele-sales upgrades were $105 million and $108 million during 2019 and 2018. We have excluded tele-sales upgrades in the calculation of VPG because tele-sales upgrades are generated by a different marketing channel. We believe that VPG provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the efficiency of this business’s tour selling efforts during a given reporting period.


^(e)	Represents paid members in our vacation exchange programs who are current on their annual membership dues or within the allowed grace period.


^(f)	Represents total revenues generated from fees associated with memberships, exchange transactions, and other servicing for the period divided by the average number of vacation exchange members during the period.


^(g)	Change percentages may not calculate due to rounding.


^(h)	The following table provides a reconciliation of Vacation ownership interest sales, net to Gross VOI sales for the years ended December 31, (in millions):



	2019		2018
Vacation ownership interest sales, net	$	1,848	$	1,769
Loan loss provision	479		456
Gross VOI sales, net of Fee-for-Service sales	2,327		2,225
Fee-for-Service sales⁽¹⁾	28		46
Gross VOI sales	$	2,355	$	2,271


⁽¹⁾	Represents total sales of VOIs through our Fee-for-Service programs where inventory is sold through our sales and marketing channels for a commission. Fee-for-Service commission revenues were $18 million and $31 million during 2019 and 2018. These commissions are reported within Service and membership fees on the Consolidated Statements of Income.

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~~RESULTS OF OPERATIONS~~

~~Hotel Group~~

Other Items

In December 2019, a strain of coronavirus was reported to have surfaced in China, resulting in travel bans invoked against Chinese residents. These travel bans, as well as cancellations by non-Chinese customers due to concerns of the virus, have caused minor impacts to our ~~franchising business, we seek~~operations in South Asia and Australia to ~~generate~~date. Our annual revenues in South Asia and Australia represent approximately 6% of our total revenues. Although the impact has been minor to date, the extent to which the coronavirus may impact our financial condition or results of operations is uncertain. We will continue to monitor events closely and work with heath authorities to ensure the safety of our owners, guests, and employees.

We record property management services revenues and RCI Elite Rewards revenues for our ~~hotel owners through our strong, well-known brands~~Vacation Ownership and ~~the delivery of services such as marketing, information technology, revenue management, training, operations support, strategic sourcing and guest services.~~

We enter into agreements to franchise our hotel group brands to independent hotel owners. Our standard franchise agreement typically has a term of 15 to 20 years and provides a franchisee with certain rights to terminate the franchise agreement before the end of the agreement under certain circumstances. The principal source of revenues from franchising hotels is ongoing royalty fees. Royalty fees are typically a percentage of gross room revenues of each franchised hotel. Royalty fees are intended to cover the use of our trademarks and our operating expenses, such as expenses incurred for franchise services, including quality assurance and administrative support, and to provide us with operating profits. These fees are recognized as revenue upon becoming due from the franchisee. An estimate of uncollectible ongoing royalty fees is charged to bad debt expense and includedVacation Exchange segments in operating expenses on the Consolidated Statements of Income. Hotel Group revenues also include initial franchise fees, which are recognized as revenues when all material services or conditions have been substantially performed, which is either when a franchised hotel opens for business or when a franchise agreement is terminated after it has been determined that the franchised hotel will not open.

Our franchise agreements also require the payment of marketing and reservation fees, which are intended to reimburse us for expenses associated with operating an international, centralized, brand-specific reservations system, e-commerce channels such as our brand.com websites, as well as access to third-party distribution channels, such as online travel agents, advertising and marketing programs, global sales efforts, operations support, training and other related services. These fees are recognized as revenue upon becoming due from the franchisee. An estimate of uncollectible ongoing marketing and reservation fees is charged to bad debt expense and included in marketing and reservation expenses on the Consolidated Statements of Income.

Generally, we are contractually obligated to expend the marketing and reservation fees we collect from franchisees in accordance with the franchise agreements; as such, revenues earned in excess of costs incurred are accrued as a liability for future marketing or reservation costs. Costs incurred in excess of revenues earned are expensed as incurred. In accordance with our franchise agreements, we include an allocation of costs required to carry out marketing and reservation activities within marketing and reservation expenses.

We also earn revenues from the Wyndham Rewards loyalty program when a member stays at a participating hotel. These revenues are derived from a fee we charge based upon a percentage of room revenues generated from such member stays. These fees are to reimburse us for expenses associated with member redemptions and activities that are related to the overall administering and marketing of the program. These fees are recognized as revenue upon becoming due from the franchisee. Since we are obligated to expend the fees we collect from franchisees, revenues earned in excess of costs incurred are accrued as a liability for future costs to support the program. In addition, we earn revenue from our co-branded Wyndham Rewards credit card program which is primarily generated by cardholder spending and the enrollment of new cardholders. The advance payments we receive under our co-branded credit program are deferred and recognized as earned over the term of the arrangement.

Other service fees we derive from providing ancillary services to franchisees are primarily recognized as revenue upon completion of services. The majority of these fees are intended to reimburse us for direct expenses associated with providing these services.

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We also provide management services for hotels under management contracts, which offer all the benefits of a global brand and a full range of management, marketing and reservation services. In addition to the standard franchise services described above, our hotel management business provides hotel owners with professional oversight and comprehensive operations support services such as hiring, training and supervising the managers and employees that operate the hotels as well as annual budget preparation, financial analysis and extensive food and beverage services. Our standard management agreement typically has a term of up to 25 years. Our management fees are comprised of base fees, which are typically a specified percentage of gross revenues from hotel operations, and incentive fees, which are typically a specified percentage of a hotel’s gross operating profit. Management fee revenues are recognized as the services are performed and when the earnings process is complete and recorded as a component of franchise fee revenues on the Consolidated Statements of Income. We incur certain reimbursable costs on behalf of managed hotel properties and report reimbursements received from managed hotels as revenues and the costs incurred on their behalf as expenses. Such reimbursable revenues are recorded as a component of service and membership fees on the Consolidated Statements of Income. The reimbursable costs, which principally relate to payroll costs for operational employees at the managed hotels, are reflected as a component of operating expenses on the Consolidated Statements of Income. The reimbursements from hotel owners are based upon the costs incurred with no added margin. As a result, these reimbursable costs have no effect on our operating income. Management fee revenues and reimbursable revenues were $22 million and $271 million, respectively, during 2016, $23 million and $273 million, respectively, during 2015 and $11 million and $148 million, respectively, during 2014.

We currently own two hotels in locations where we have developed timeshare units. Revenues earned from our owned hotels are comprised of (i) gross room night rentals, (ii) food and beverage services and (iii) on-site spa, casino, golf and shop revenues. We are responsible for all the operations of the hotels and recognize all revenues and expenses of these hotels.

Within our Hotel Group segment, we measure operating performance using the following key operating statistics: (i) number of rooms, which represents the number of rooms at hotel group properties at the end of the year and (ii) revenue per available room (RevPAR), which is calculated by multiplying the percentage of available rooms occupied during the year by the average rate charged for renting a hotel room for one day.

~~Destination Network~~

As a provider of vacation exchange services, we enter into affiliation agreements with developers of vacation ownership properties to allow owners of intervals of VOIs to trade their intervals for intervals at other properties affiliated with our RCI brand and, for some members, for other leisure-related services and products. Additionally, as a marketer of vacation rental properties, generally we enter into contracts for exclusive periods of time with property owners to market the rental of such properties to rental customers.

Our RCI brand derives a majority of its revenues from annual membership dues and exchange fees from RCI members trading their intervals. Revenues from annual membership dues represent the annual fees from RCI members who, for additional fees, have the right to exchange their intervals for intervals at other properties affiliated with our exchange network and, for certain members, for other leisure-related services and products. We recognize revenues from annual membership dues on a straight-line basis over the membership period during which delivery of publications, if applicable, and other services are provided to the members. Exchange fees are generated when members exchange their intervals for intervals at other properties affiliated with our exchange network or for other leisure-related services and products. We also offer other exchange related products that provide RCI members the ability to (i) purchase trading power or points protection, (ii) extend the life of deposits and (iii) combine two or more deposits for the opportunity to exchange into intervals with higher trading power. Exchange fees and other exchange related product fees are recognized as revenues, net of expected cancellations, when these transactions have been confirmed to the member.

Our vacation rental brands primarily derive their revenues from fees, which generally average between 20% and 45% of the gross booking fees. For properties which we own, manage or operate under long-term capital and operating leases (which represent less than 10% of our portfolio), we receive 100% of the revenues. The majority of the time, we act on behalf of the owners of the rental properties to generate our fees. We provide reservation services to the independent property owners and receive the agreed-upon fee for the services provided. We remit the gross rental fee received from the renter to the independent property owner, net of our agreed-upon fee. Revenues from such fees that are recognized in the period that the rental reservation is made are recorded, net of expected cancellations.

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Cancellations for 2016, 2015 and 2014 each totaled less than 4% of rental transactions booked. Upon confirmation of the rental reservation, the rental customer and property owner generally have a direct relationship for additional services to be performed. We also earn rental fees in connection with properties which we own, manage or operate and such fees are recognized ratably over the rental customer’s stay, as this is the point at which the service is rendered. Our revenues are earned when evidence of an arrangement exists, delivery has occurred or the services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.

Within our Destination Network segment, we measure operating performance using the following key operating statistics: (i) average number of vacation exchange members, which represents members in our vacation exchange programs who pay annual membership dues and are entitled, for additional fees, to exchange their intervals for intervals at other properties affiliated with our exchange network and, for certain members, for other leisure-related services and products, (ii) exchange revenue per member, which represents total revenue from fees associated with memberships, exchange transactions, member-related rentals and other services for the year divided by the average number of vacation exchange members during the year, (iii) vacation rental transactions, which represents the number of standard one-week rental transactions that are generated in connection with customers booking their vacation rental stays through us and (iv) average net price per vacation rental, which represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees divided by the number of vacation rental transactions.

~~Vacation Ownership~~

Our vacation ownership business develops, markets and sells VOIs to individual consumers, provides property management services at resorts and provides consumer financing in connection with the sale of VOIs. It derives the majority of its revenues from sales of VOIs and other revenues from consumer financing and property management. Our sales of VOIs are either cash sales or developer-financed sales. In order for us to recognize revenues from VOI sales under the full accrual method of accounting, as prescribed in the guidance for sales of real estate for fully constructed inventory, a binding sales contract must have been executed, the statutory rescission period must have expired (after which time the purchasers are not entitled to a refund except for non-delivery by us), receivables must have been deemed collectible and the remainder of our obligations must have been substantially completed. In addition, before we recognize any revenues from VOI sales, the purchaser of the VOI must have met the initial investment criteria and, as applicable, the continuing investment criteria, by executing a legally binding financing contract. A purchaser has met the initial investment criteria when a minimum down payment of 10% is received by us. In accordance with the guidance for ~~accounting~~reporting revenues gross as a principal versus net as an agent, which requires that these revenues be recorded on a gross basis.

Discussed below are our consolidated results of operations and the results of operations for ~~real estate time-sharing transactions,~~each of our reportable segments. These reportable segments represent our operating segments for which discrete financial information is available and which are utilized on a regular basis by our chief operating decision maker to assess performance and to allocate resources. In identifying the reportable segments, we ~~must~~ also ~~take into consideration~~consider the ~~fair value~~nature of ~~certain incentives~~services provided by our operating segments. Management uses net revenues and Adjusted EBITDA to assess the ~~purchaser when assessing the adequacy~~performance of the ~~purchaser’s initial investment. In those cases where~~reportable segments. We define Adjusted EBITDA as Net income before Depreciation and amortization, Interest expense (excluding Consumer financing ~~is provided to the purchaser by us, the purchaser is obligated to remit monthly payments under~~interest), Early extinguishment of debt, Interest income (excluding Consumer financing ~~contracts that represent the purchaser’s continuing investment.~~revenues) and income taxes. Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, transaction costs, impairments, gains and losses on sale/

We offer consumer financing as an option to customers purchasing VOIs, which are typically collateralized by the underlying VOI. The contractual terms of Company-provided financing agreements require that the contractual level of annual principal payments be sufficient to amortize the loan over a customary period for the VOI being financed, which is generally 10 years, and payments under the financing contracts begin within 45 days of the sale and receipt of the minimum down payment of 10%. An estimate of uncollectible amounts is recorded at the time of the sale with a charge to the provision for loan losses, which is classified as a reduction of VOI sales on the Consolidated Statements of Income. The interest income earned from the financing arrangements is earned on the principal balance outstanding over the life of the arrangement and is recorded within consumer financing on the Consolidated Statements of Income.

We also provide day-to-day-management services, including oversight of housekeeping services, maintenance and certain accounting and administrative services for property owners’ associations and clubs. In some cases, our employees serve as officers and/or directors of these associations and clubs in accordance with their by-laws and associated regulations. We receive fees for such property management services which are generally based upon total costs to operate such resorts. Fees for property management services typically approximate 10% of budgeted operating expenses. Property management fee revenues are recognized when the services are performed and are recorded as a component of service and membership fees on the Consolidated Statements of Income. Property management revenues, which are comprised of management fee revenue and reimbursable revenue, were $660 million, $615 million and $581 million during 2016, 2015 and 2014, respectively. Management fee revenues were $287 million, $275 million and $288 million during 2016, 2015 and 2014, respectively. Reimbursable revenues, which are based upon certain reimbursable costs with no added margin, were $373 million, $340 million and $293 million during 2016, 2015 and 2014, respectively. These reimbursable costs principally relate to the payroll costs for management of the associations, club and resort properties where we are the employer and are reflected as a component of operating expenses on the Consolidated Statements of Income. One of the associations that we manage paid our Destination Network segment $26 million, $24 million and $19 million for exchange services during 2016, 2015 and 2014, respectively.

4041

Table of Contents

~~Within~~

OPERATING STATISTICS

The table below presents our ~~Vacation Ownership segment, we measure~~ operating ~~performance using~~statistics for the ~~following key~~years ended December 31, 2019 and 2018. These operating ~~statistics: (i) gross VOI sales (including tele-sales upgrades, which~~statistics are the drivers of our revenues and therefore provide an enhanced understanding of our businesses. Refer to the Results of Operations section for a ~~component~~discussion on how these operating statistics affected our business for the periods presented.



	Year Ended December 31,
	2019		2018		% Change ^(g)
Vacation Ownership ^(a)
Gross VOI sales (in millions) ^{(b) (h)}	$	2,355	$	2,271	3.7
Tours (in 000s) ^(c)	945		904		4.5
Volume Per Guest (“VPG”) ^(d)	$	2,381	$	2,392	(0.4)
Vacation Exchange ^(a)
Average number of members (in 000s) ^(e)	3,887		3,847		1.0
Exchange revenue per member ^(f)	$	166.54	$	171.04	(2.6)


^(a)	Includes the impact from acquisitions from the acquisition dates forward.


^(b)	Represents total sales of VOIs, including sales under the Fee-for-Service program, before the effect of loan loss provisions. We believe that Gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.


^(c)	Represents the number of tours taken by guests in our efforts to sell VOIs.

^(d)


^(e)	Represents paid members in our vacation exchange programs who are current on their annual membership dues or within the allowed grace period.


^(f)	Represents total revenues generated from fees associated with memberships, exchange transactions, and other servicing for the period divided by the average number of vacation exchange members during the period.


^(g)	Change percentages may not calculate due to rounding.


^(h)	The following table provides a reconciliation of Vacation ownership interest sales, net to Gross VOI sales for the years ended December 31, (in millions):



	2019		2018
Vacation ownership interest sales, net	$	1,848	$	1,769
Loan loss provision	479		456
Gross VOI sales, net of Fee-for-Service sales	2,327		2,225
Fee-for-Service sales⁽¹⁾	28		46
Gross VOI sales	$	2,355	$	2,271


⁽¹⁾	Represents total sales of VOIs through our Fee-for-Service programs where inventory is sold through our sales and marketing channels for a commission. Fee-for-Service commission revenues were $18 million and $31 million during 2019 and 2018. These commissions are reported within Service and membership fees on the Consolidated Statements of Income.

Table of upgrade sales) before the net effect of POC and loan loss provisions, (ii) tours, which represents the number of tours taken by guests in our efforts to sell VOIs and (iii) volume per guest (“VPG”), which represents revenue per guest and is calculated by dividing the gross VOI sales (excluding tele-sales upgrades, which are a component of upgrade sales) by the number of tours.Contents

Other Items

In December 2019, a strain of coronavirus was reported to have surfaced in China, resulting in travel bans invoked against Chinese residents. These travel bans, as well as cancellations by non-Chinese customers due to concerns of the virus, have caused minor impacts to our operations in South Asia and Australia to date. Our annual revenues in South Asia and Australia represent approximately 6% of our total revenues. Although the impact has been minor to date, the extent to which the coronavirus may impact our financial condition or results of operations is uncertain. We will continue to monitor events closely and work with heath authorities to ensure the safety of our owners, guests, and employees.

We record ~~marketing~~property management services revenues and ~~reservation revenues, Wyndham Rewards revenues,~~ RCI Elite Rewards revenues ~~and hotel/property management services revenues~~ for our ~~Hotel Group, Destination Network~~Vacation Ownership and Vacation ~~Ownership~~Exchange segments in accordance with the guidance for reporting revenues gross as a principal versus net as an agent, which requires that these revenues be recorded on a gross basis.

Discussed below are our consolidated results of operations and the results of operations for each of our reportable segments. ~~The~~These reportable segments ~~presented below~~ represent our operating segments for which ~~separate~~discrete financial information is available and which isare utilized on a regular basis by our chief operating decision maker to assess performance and to allocate resources. In identifying ~~our~~the reportable segments, we also consider the nature of services provided by our operating segments. Management ~~evaluates the operating results of each of our reportable segments based upon~~uses net revenues and ~~“EBITDA”, which is defined~~Adjusted EBITDA to assess the performance of the reportable segments. We define Adjusted EBITDA as ~~net~~Net income before ~~depreciation~~Depreciation and amortization, ~~interest~~Interest expense (excluding ~~consumer~~Consumer financing interest), ~~early~~Early extinguishment of debt, ~~interest~~Interest income (excluding ~~consumer~~Consumer financing revenues) and income ~~taxes, each~~taxes. Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, transaction costs, impairments, gains and losses on sale/

Table of ~~which is presented on~~Contents

disposition of business, and items that meet the ~~Consolidated Statements~~conditions of ~~Income.~~unusual and/or infrequent. We believe that Adjusted EBITDA is a useful measure of performance for our ~~industry~~ segments ~~and,~~which, when considered with ~~GAAP~~the Generally Accepted Accounting Principles in the U.S. (“GAAP”) measures, we believe gives a more complete understanding of our operating performance. Our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

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~~OPERATING STATISTICS~~

The following table presents our operating statistics for the years ended December 31, 2016 and 2015. See Results of Operations section for a discussion as to how these operating statistics affected our business for the periods presented.

Year Ended December 31,
2016 2015 % Change
Hotel Group^(a)

Number of rooms ^(b)
697,600
678,000
2.9
RevPAR ^(c)
$ 36.67
$ 37.26
(1.6)
Destination Network
Average number of members (in 000s) ^(d)
3,852
3,831
0.5
Exchange revenue per member ^(e)
$ 167.48
$ 169.29
(1.1)
Vacation rental transactions (in 000s) ^{(a) (f)}
1,767
1,630
8.4
Average net price per vacation rental ^{(a) (g)}
$ 475.24
$ 494.92
(4.0)
Vacation Ownership^(a)

Gross VOI sales (in 000s) ^{(h) (i)}
$ 2,012,000
$ 1,965,000
2.4
Tours (in 000s) ^(j)
819
801
2.2
VPG ^(k)
$ 2,324
$ 2,326
(0.1)


^(a)	~~Includes the impact from acquisitions from the acquisition dates forward. Therefore, the operating statistics for 2016 are not presented on a comparable basis to the 2015 operating statistics.~~


^(b)	~~Represents the number of rooms at hotel group properties at the end of the period which are under franchise and/or management agreements, or are company owned.~~


^(c)	~~Represents revenue per available room and is calculated by multiplying the percentage of available rooms occupied during the period by the average rate charged for renting a hotel room for one day.~~


^(d)	~~Represents members in our vacation exchange programs who paid annual membership dues as of the end of the period or who are within the allowed grace period~~


^(e)	Represents total annualized revenues generated from fees associated with memberships, exchange transactions, member-related rentals and other servicing for the period divided by the average number of vacation exchange members during the period.


^(f)	Represents the number of transactions that are generated in connection with customers booking their vacation rental stays through us. One rental transaction is recorded for each standard one-week rental.


^(g)	Represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees during the period divided by the number of vacation rental transactions during the period.


^(h)	Represents total sales of VOIs, including sales under Wyndham Asset Affiliation Model (“WAAM”) Fee-for-Service, before the net effect of POC accounting and loan loss provisions. We believe that Gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.


⁽ⁱ⁾	~~The following table provides a reconciliation of Gross VOI sales to vacation ownership interest sales for the year ended December 31 (in millions):~~

2016 2015
Gross VOI sales $ 2,012
$ 1,965
Less: WAAM Fee-for-Service sales ⁽¹⁾
(64 ) (126 )
Gross VOI sales, net of WAAM Fee-for-Service sales ⁽²⁾
1,948
1,838
Less: Loan loss provision (342 ) (248 )
Plus: Impact of POC accounting —
13
Vacation ownership interest sales $ 1,606
$ 1,604


⁽¹⁾	Represents total sales of VOIs through our WAAM Fee-for-Service sales model designed to offer turn-key solutions for developers or banks in possession of newly developed inventory, which we will sell for a commission fee through our extensive sales and marketing channels. WAAM Fee-for-Service commission revenues amounted to $46 million and $83 million during 2016 and 2015, respectively.


⁽²⁾	~~Amounts may not foot due to rounding.~~


^(j)	~~Represents the number of tours taken by guests in our efforts to sell VOIs.~~

^(k)

VPG is calculated by dividing Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) by the number of tours. Tele-sales upgrades were $108 million and $100 million during 2016 and 2015, respectively. We have excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. We believe that VPG provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the efficiency of the business’s tour selling efforts during a given reporting period.

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~~Year Ended December 31, 2016 vs. Year Ended December 31, 2015~~

~~Our consolidated results are as follows:~~

Year Ended December 31,

2016 2015 Favorable/(Unfavorable)
Net revenues $ 5,599
$ 5,536
$ 63
Expenses 4,542
4,521
(21 )
Operating income 1,057
1,015
42
Other (income)/expense, net (22 ) (17 ) 5
Interest expense 136
125
(11 )
Early extinguishment of debt 11
—
(11 )
Interest income (8 ) (9 ) (1 )
Income before income taxes 940
916
24
Provision for income taxes 328
304
(24 )
Net income 612
612
—
Net income attributable to noncontrolling interest (1 ) —
(1 )
Net income attributable to Wyndham shareholders $ 611
$ 612
$ (1 )

Net revenues increased $63 million (1.1%) during 2016 compared with 2015. Foreign currency translation unfavorably impacted net revenues by $49 million. Excluding foreign currency translation, the increase in net revenues was primarily the result of:

~~$44 million of higher revenues (excluding intersegment revenues) at our destination network business primarily from an increase in volume on rental transactions;~~

~~$34 million of incremental revenues resulting from acquisitions at our hotel group and destination network businesses;~~

$24 million of higher revenues at our vacation ownership business primarily resulting from an increase in property management and consumer financing revenues, partially offset by a decrease in commission revenues resulting from lower WAAM Fee-for-service VOI sales; and

~~$10 million of higher revenues at our hotel group business (excluding intersegment revenues) primarily due to an increase in ancillary services.~~

Expenses increased $21 million (0.5%) during 2016 compared with 2015. Foreign currency favorably impacted expenses by $33 million. Excluding foreign currency, the increase in expenses was primarily the result of:

~~$27 million of incremental expenses related to acquisitions at our hotel group and destination network businesses;~~

~~a $24 million foreign exchange loss related to the devaluation of the Venezuela exchange rate at our destination network business;~~

~~an $18 million increase in depreciation and amortization resulting from the impact of property and equipment additions that were placed in service;~~

~~$9 million of higher restructuring costs resulting from organizational realignments across our business; and~~

~~$6 million of costs associated with the departure of the chief executive officer at our vacation ownership business.~~

~~Such increases in expenses were partially offset by:~~

~~an $11 million benefit from an adjustment to certain contingent liabilities resulting from our separation from Cendant;~~

~~the absence of a $7 million non-cash impairment charge incurred during the third quarter of 2015;~~

~~$7 million of lower expense related to the termination of a management contract which resulted in a charge of $7 million and $14 million during the third quarter of 2016 and 2015, respectively; and~~

~~a $5 million decrease in expenses resulting from cost containment efforts.~~

~~Other income, net increased $5 million during 2016 compared with 2015 primarily from settlements of business interruption claims received principally at our vacation ownership business.~~

~~Interest expense increased $11 million during 2016 compared with 2015 primarily due to higher borrowings.~~

~~During 2016, we incurred $11 million of expenses resulting from the early repurchase of the remaining portion of our 6.00% senior unsecured notes.~~

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Our effective tax rate increased from 33.2% in 2015 to 34.9% in 2016 primarily due to a lower tax benefit in 2016 resulting from changes in our valuation allowance, partially offset by a benefit from an increase in foreign tax credits.

~~As a result of these items, net income attributable to Wyndham shareholders decreased $1 million as compared with 2015.~~

~~Following is a discussion of the 2016 results of each of our segments and Corporate and Other compared to 2015:~~

Net Revenues EBITDA
2016 2015 % Change 2016 2015 % Change
Hotel Group $ 1,309
$ 1,297
0.9 $ 391
^(b)
$ 349
^(g)
12.0
Destination Network 1,571
1,538
2.1 356
^(c)
367
^(h)
(3.0)
Vacation Ownership 2,794
2,772
0.8 694
^(d)
687
⁽ⁱ⁾
1.0
Total Reportable Segments 5,674
5,607
1.2 1,441
1,403
2.7
Corporate and Other ^(a)
(75 ) (71 ) (5.6) (110 )
^(e)
(137 )
^(j)
19.7
Total Company $ 5,599
$ 5,536
1.1 $ 1,331
$ 1,266
5.1

Reconciliation of EBITDA to Net Income

2016 2015
EBITDA $ 1,331
$ 1,266

Depreciation and amortization 252
234

Interest expense 136
125

Early extinguishment of debt 11
^(f)
—

Interest income (8 ) (9 )
Income before income taxes 940
916

Provision for income taxes 328
304

Net income 612
612

Net income attributable to noncontrolling interest (1 ) —

Net income attributable to Wyndham shareholders $ 611
$ 612


^(a)	~~Includes the elimination of transactions between segments.~~


^(b)	Includes (i) $7 million of costs associated with the termination of a management contract and (ii) $2 million of restructuring costs incurred as a result of our focus on enhancing organizational efficiency.


^(c)	Includes (i) a $24 million foreign currency loss related to the devaluation of the exchange rate of Venezuela, (ii) $5 million of restructuring costs incurred as a result of our focus on enhancing organizational efficiency, (iii) a $2 million gain from a bargain purchase on an acquisition of a vacation rentals business and (iv) $1 million of acquisition costs.


^(d)	Includes $8 million of restructuring costs incurred as a result of our focus on enhancing organizational efficiency and rationalizing existing facilities and $6 million of costs associated with the departure of the chief executive officer at our vacation ownership business.


^(e)	~~Includes $121 million of corporate costs partially offset by an $11 million benefit from an adjustment to certain contingent liabilities resulting from our Separation.~~


^(f)	~~Represents costs incurred for the early repurchase of the remaining portion of our 6.00% senior unsecured notes.~~

^(g)

Includes (i) $14 million of costs associated with the anticipated termination of a management contract, (ii) a $7 million non-cash impairment charge related to the write-down of terminated in-process technology projects resulting from the decision to outsource its reservation system to a third-party provider, (iii) $4 million of restructuring costs incurred as a result of an organizational realignment of brand services and call center operations, partially offset by a $1 million reversal of a portion of a restructuring reserve during and (iv) $3 million of costs incurred in connection with the Dolce acquisition.


^(h)	~~Includes $3 million of restructuring costs incurred as a result of a rationalization of our international operations, partially offset by a $1 million reversal of a portion of a restructuring reserve.~~


⁽ⁱ⁾	~~Includes $1 million of restructuring costs incurred as a result of an organizational realignment of the sales function.~~


^(j)	~~Includes $137 million of corporate costs.~~

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~~Hotel Group~~

Net revenues and EBITDA increased $12 million (0.9%) and $42 million (12.0%), respectively, during the twelve months ended December 31, 2016 compared with the same period during 2015. Foreign currency translation unfavorably impacted revenues and EBITDA by $4 million and $2 million, respectively.

Net revenues from royalty, marketing and reservation fees (inclusive of Wyndham Rewards) declined $3 million compared to the prior year. Excluding an unfavorable foreign currency translation impact of $4 million, royalty revenues increased $4 million, which was primarily offset by a $3 million reduction in marketing, reservation and Wyndham Rewards revenues. The increase in royalties was the result of a 2.9% increase in global system size partially offset by a 1.6% decline in global RevPAR. Domestic RevPAR increased 1.6% reflecting a 2.9% increase in average daily rates and a 1.2% decline in occupancy rates. International RevPAR declined 7.0% primarily due to unfavorable currency translation and country mix as a larger portion of our international room growth was in China, which has a lower RevPAR than other international regions.

Revenues and EBITDA from other franchise fees increased $5 million and $2 million, respectively, primarily due to higher initial franchise fees on property openings. Ancillary services contributed an additional $10 million and $9 million of revenues and EBITDA, respectively, primarily due to growth in our co-branded credit card program.

~~In addition to the items discussed above, EBITDA was also favorably impacted by:~~

~~$11 million of lower marketing expenses;~~

~~the absence of a $7 million non-cash impairment charge related to the write-down of terminated in-process technology projects during the third quarter of 2015;~~

~~$7 million of lower expense related to the termination of a management contract which resulted in a charge of $7 million and $14 million during the third quarter of 2016 and 2015, respectively.~~

~~$7 million of lower expenses primarily due to employee-related costs; and~~

~~$2 million of lower integration and deal costs.~~

As of December 31, 2016, we had 8,035 properties and over 697,600 rooms in our system. Additionally, our hotel development pipeline included over 1,110 hotels and approximately 138,300 rooms, of which 60% were international and 67% were new construction.

~~Destination Network~~

Net revenues increased $33 million (2.1%) and EBITDA decreased $11 million (3.0%) during the twelve months ended December 31, 2016 compared with 2015. Foreign currency translation unfavorably impacted net revenues and EBITDA by $43 million and $15 million, respectively. EBITDA also reflected a $24 million foreign exchange loss related to the devaluation of the exchange rate of Venezuela during the first quarter of 2016.

Our acquisitions of vacation rentals brands contributed $25 million of incremental revenues (inclusive of $1 million of ancillary revenues) and $7 million of incremental EBITDA, which included a $2 million gain from a bargain purchase on an acquisition of a vacation rentals business during 2016.

Net revenues generated from rental transactions and related services increased $33 million. Excluding an unfavorable impact of $33 million from foreign currency translation and $24 million of incremental vacation rental revenues from acquisitions, net revenues generated from rental transactions and related services increased $42 million principally due to a 6.2% increase in rental transaction volume, partially offset by a 0.9% decline in average net price per vacation rental. The increase in volume was driven by growth across our Denmark-based Novasol brand, our U.K. cottage and parks brands and our Netherlands-based Landal GreenParks brand. The decline in average net price per vacation rental was a result of the mix impact from higher growth in our more moderate product offerings primarily related to our U.K. cottages and parks brands and our Novasol brand, partially offset by increases in our Landal GreenParks and WVR NA brands’ average price per week.

Exchange and related services revenue, which principally consist of fees generated from memberships, exchange transactions, member-related rentals and other member servicing decreased $4 million. Excluding an unfavorable foreign currency translation impact of $10 million, exchange and related services revenue increased $6 million primarily due to (i) a 0.5% increase in the average number of members principally resulting from new member growth in North America and Latin America and (ii) a 0.4% increase in exchange revenue per member resulting from increased pricing for exchange and other related fees, partially offset by the impact of growth in club memberships in North America where there is a lower propensity to transact.

~~Table of Contents~~

~~Additionally, ancillary revenues increased $4 million primarily due to call center services provided to our hotel group business.~~

~~In addition to the items discussed above, EBITDA was unfavorably impacted by:~~

~~$31 million of higher costs resulting from revenue increases;~~

~~$6 million of higher information technology costs primarily related to growth initiatives;~~

~~the absence of a $4 million benefit from a reserve reversal for value-added taxes resulting from a favorable ruling during the first quarter of 2015;~~

~~$3 million of higher restructuring costs, which includes $5 million of such costs recorded during 2016, partially offset by $2 million recorded during 2015; and~~

~~a $2 million non-cash impairment charge related to the write-down of an equity investment.~~

~~Such amounts were partially offset by:~~

~~$7 million of lower operating expenses at our U.K.-based James Villa Holidays brand associated with securing product cost at exchange rates prior to the 2016 currency devaluation of the British pound;~~

~~$4 million of lower employee-related expenses;~~

~~a $3 million reimbursement of legal fees and associated costs related to a favorable court ruling; and~~

~~a $2 million favorable impact from foreign exchange transactions and foreign exchange contracts.~~

EBITDA was also unfavorably impacted by the absence of $6 million from the settlement of business disruption claims received during 2015 related to the 2010 Gulf of Mexico oil spill, partially offset by $3 million received during 2016.

~~Vacation Ownership~~

Net revenues increased $22 million (0.8%) and EBITDA increased $7 million (1.0%), respectively, during the twelve months ended December 31, 2016 compared with the same period of 2015. Foreign currency translation unfavorably impacted net revenues and EBITDA by $2 million and $1 million, respectively.

Net VOI revenues increased $2 million compared to the same period last year. Excluding an unfavorable foreign currency translation impact of $1 million, net VOI revenues increased $3 million. Such increase was primarily due to a $110 million increase in gross VOI sales, net of WAAM Fee-for-service sales that was almost completely offset by (i) a $94 million increase in our provision for loan losses and (ii) the absence of $13 million of VOI revenues recognized during 2015 under percentage-of-completion accounting. The increase in the provision for loan losses reflected organized activity by third-parties encouraging customers to default on their timeshare loans and higher financing activity on VOI sales.

Excluding a $1 million unfavorable impact from foreign currency translation, Gross VOI sales increased $48 million (2.4%) compared to the same period last year primarily due to a 2.2% increase in tours resulting from of our continued focus on targeting new owner generation. VPG remained flat compared to the prior year.

Commission revenues and EBITDA decreased $37 million and $2 million, respectively, compared to the prior year resulting from lower WAAM Fee-for-service VOI sales as we continue to shift our focus to utilizing our WAAM Just-in-Time inventory.

Consumer financing revenues and EBITDA increased $13 million and $12 million, respectively compared to the same period last year. Such increases were due to a higher weighted average interest rate earned and a larger average portfolio balance. EBITDA was also impacted by $1 million of higher interest expense resulting from an increase in the weighted average interest rate on our securitized debt to 3.6% from 3.5%, partially offset by a lower average securitized debt balance. As a result, our net interest income margin increased to 83.0% compared to 82.8% during 2015.

Property management revenues and EBITDA increased by $45 million and $15 million compared to the prior year primarily as a result of higher reimbursable revenues and management fees. EBITDA also benefited from lower operating expenses and employee-related costs.

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~~In addition, EBITDA was unfavorably impacted by:~~

~~a $30 million increase in marketing costs due to tour growth from our continued focus on new owner generation which yields a higher cost per tour;~~

~~$20 million of higher sales and commission expenses primarily due to $110 million of higher gross VOI sales, net of WAAM Fee-for-Service;~~

~~$7 million of higher maintenance fees on unsold inventory;~~

~~$7 million of higher restructuring charges; and~~

~~$6 million of costs associated with the departure of the segment’s chief executive officer.~~

~~Such decreases in EBITDA were partially offset by:~~

a $19 million reduction in the cost of VOIs sold primarily due to the favorable impact on estimated inventory recoveries resulting from an increase in the provision for loan losses, partially offset by (i) higher costs related to the increase in VOI sales and (ii) higher average product costs;

~~a $21 million decrease in general and administrative expenses primarily associated with lower employee-related costs and legal expenses; and~~

~~$9 million received during 2016 resulting from the settlement of several business interruption claims.~~

~~Corporate and Other~~

~~Corporate and Other revenues, which primarily represent the elimination of intersegment revenues charged between our businesses, decreased $4 million during the year ended 2016 compared to 2015.~~

Corporate expenses (excluding intercompany expense eliminations) decreased $27 million during the year ended 2016 compared to the prior year primarily due to lower employee-related costs and a benefit related to an adjustment to certain contingent liabilities resulting from our Separation.

~~Table of Contents~~

~~OPERATING STATISTICS~~Vacation Ownership

Our vacation ownership business has its main corporate operations in Orlando, Florida, pursuant to several leases which begin to expire in 2025. Our vacation ownership business also has leased spaces in Redmond, Washington; Springfield, Missouri; Chicago, Illinois; Las Vegas, Nevada; and Bundall, Australia, with various expiration dates between 2020 and 2030. Our vacation ownership business leases space for administrative functions in Las Vegas, Nevada, that expires in 2028 and in Northbrook, Illinois, that expires in 2020. In addition, our vacation ownership business leases 157 marketing and sales offices with 126 locations in the U.S. and the remaining locations in Australia, the Caribbean, Thailand, Mexico, Fiji, New Zealand, Indonesia, and the Philippines. All leases that are due to expire in 2020 are presently under review related to our ongoing requirements.

Vacation Exchange

Our exchange business is headquartered in Orlando, Florida, pursuant to several leases which begin to expire in 2025. The business also owns one property in Indianapolis, Indiana and one property in Mexico. There are 32 leased offices, of which four are located in North America, 12 in Latin America, 10 in Europe, four in Asia Pacific, and two in Africa. Such leases have expiration dates between 2020 through 2029. All leases that are due to expire in 2020 are presently under review related to our ongoing requirements.

ITEM 3. LEGAL PROCEEDINGS

We are involved in various claims and lawsuits arising in the ordinary course of business, none of which, in the opinion of management, is expected to have a material adverse effect on our results of operations, financial condition or cash flows. See Note 20—Commitments and Contingencies to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for a description of claims and legal actions arising in the ordinary course of our business and Note 28—Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for a description of our obligations regarding Cendant contingent litigation, matters related to Wyndham Hotels, matters related to the European vacation rentals business, and matters related to the North American vacation rentals business.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

Table of Contents

PART II


ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Price of Common Stock

Our common stock is listed on the NYSE under the symbol “WYND.” As of January 31, 2020, the number of stockholders of record was 4,720. The equity plan compensation information called for by Item 201(d) of Regulation S-K is set forth in Part III, Item 12 of this Annual Report on Form 10-K under the heading “Equity Compensation Plan Information as of December 31, 2019.”

Issuer Purchases of Equity Securities

Below is a summary of our Wyndham Destinations common stock repurchases by month for the quarter ended December 31, 2019:



ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Dollar Value of Shares that May Yet Be Purchased Under the Publicly Announced Plan^(b)
October 2019 (October 1-31)	727,296	$	45.50	727,296	$	567,898,433
November 2019 (November 1-30)	1,292,200	47.10		1,292,200	507,032,494
December 2019 ^(a)(December 1-31)	620,910	50.08		620,910	476,073,903
Total^(a)	2,640,406	$	47.36	2,640,406	$	476,073,903


(a)	Includes 57,000 shares purchased for which the trade date occurred in December 2019 while settlement occurred in January 2020.

(b)

On August 20, 2007, our Board of Directors (“Board”) authorized the repurchase of the Company’s common stock (the “Share Repurchase Program”). Under the Share Repurchase Program, the Company is authorized to repurchase shares through open market purchases, privately-negotiated transactions or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The Share Repurchase Program has no time limit and may be suspended or discontinued completely at any time. The Board has since increased the capacity of the Share Repurchase Program eight times, most recently on October 23, 2017, by $1.0 billion, bringing the total authorization under the program to $6.0 billion. Proceeds received from stock option exercises have increased the repurchase capacity by $78 million since the inception of this program. Under our current and prior stock repurchase plans, the total authorization is $6.8 billion. See “Stock Repurchase Program” section included in Item 7 of this Annual Report on Form 10-K for further information on the Share Repurchase Program.

For a description of limitations on the payment of our dividends, see the “Dividends” section included in Item 7 of this Annual Report on Form 10-K.

Stock Performance Graph

The Stock Performance Graph is not deemed filed with the SEC and shall not be deemed incorporated by reference into any of our prior or future filings made with the SEC.

The following ~~table presents~~Stock Performance Graph compares the cumulative total stockholder return of our ~~operating statistics~~common stock against the cumulative total returns of the Standard & Poor’s Rating Services (“S&P”) Midcap 400 index and the S&P Hotels, Resorts & Cruise Lines index for the ~~years ended~~period from December 31, ~~2015~~2014, to December 31, 2019. The graph assumes that $100 was invested on December 31, 2014, and ~~2014. See Results~~all dividends and other distributions were reinvested.

Table of ~~Operations section for a discussion as to how these operating statistics affected our business for~~Contents

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN^(a)

Among Wyndham Destinations, the ~~periods presented.~~S&P Midcap 400 Index

and the S&P Hotels, Resorts, & Cruise Lines Index

^(a) $100 invested on December 31, 2014, in stock or index, including reinvestment of dividends.

Fiscal year ending December 31.

Year Ended December 31,
2015 2014 % Change
Hotel Group ^(a)

Number of rooms ^(b)
678,000
660,800
2.6
RevPAR ^(c)
$ 37.26
$ 37.57
(0.8)
Destination Network
Average number of members (in 000s) ^(d)
3,831
3,765
1.8
Exchange revenue per member ^(e)
$ 169.29
$ 177.12
(4.4)
Vacation rental transactions (in 000s) ^{(a) (f)}
1,630
1,552
5.0
Average net price per vacation rental ^{(a) (g)}
$ 494.92
$ 558.95
(11.5)
Vacation Ownership
Gross VOI sales (in 000s) ^{(h) (i)}
$ 1,965,000
$ 1,889,000
4.0
Tours (in 000s) ^(j)
801
794
0.9
VPG ^(k)
$ 2,326
$ 2,257
3.1



Cumulative Total Return
	12/14		12/15		12/16		12/17		12/18		12/19

Wyndham Destinations	$	100.00	$	86.48	$	93.47	$	145.28	$	103.11	$	154.73
S&P Midcap 400	$	100.00	$	97.82	$	118.11	$	137.30	$	122.08	$	154.07
S&P Hotels, Resorts & Cruise Lines	$	100.00	$	103.87	$	111.68	$	166.50	$	136.42	$	186.97

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

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ITEM 6. SELECTED FINANCIAL DATA



	As of or For the Year Ended December 31,
	2019			2018			2017			2016			2015
Income statement data (in millions):
Net revenues	$	4,043		$	3,931		$	3,806		$	3,692		$	3,657
Expenses
Operating and other ^(a)	3,106			3,051			3,000			2,907			2,888
Separation and related costs	45			223			26			—			—
Asset impairments	27			(4		)	205			—			—
Depreciation and amortization	121			138			136			127			119
Total expenses	3,299			3,408			3,367			3,034			3,007
Gain on sale of business	(68		)	—			—			—			—
Operating income	812			523			439			658			650
Other (income), net	(23		)	(38		)	(28		)	(21		)	(15		)
Interest expense	162			170			155			133			122
Early extinguishment of debt	—			—			—			11			—
Interest (income)	(7		)	(5		)	(6		)	(7		)	(8		)
Income before income taxes	680			396			318			542			551
Provision/(benefit) for income taxes	191			130			(328		)	190			173
Net income from continuing operations	489			266			646			352			378
(Loss)/income from operations of discontinued businesses, net of income taxes	—			(50		)	209			260			229
Gain on disposal of discontinued business, net of income taxes	18			456			—			—			—
Net income	507			672			855			612			607
Net income attributable to noncontrolling interest	—			—			(1		)	(1		)	—
Net income attributable to Wyndham Destinations shareholders	$	507		$	672		$	854		$	611		$	607

Per share data
Basic earnings per share
Continuing operations	$	5.31		$	2.69		$	6.26		$	3.19		$	3.21
Discontinued operations	0.19			4.11			2.03			2.37			1.94
	$	5.50		$	6.80		$	8.29		$	5.56		$	5.15

Basic weighted average shares outstanding (in millions)	92.1			98.9			103.0			109.9			118.0

Diluted earnings per share
Continuing operations	$	5.29		$	2.68		$	6.22		$	3.17		$	3.18
Discontinued operations	0.19			4.09			2.02			2.35			1.92
	$	5.48		$	6.77		$	8.24		$	5.52		$	5.10

Diluted weighted average shares outstanding (in millions)	92.4			99.2			103.7			110.6			119.0

Dividends
Cash dividends declared per share	$	1.80		$	1.89		$	2.32		$	2.00		$	1.68

Balance sheet data (in millions):
Securitized assets ^(b)	$	3,121		$	3,028		$	2,680		$	2,601		$	2,576
Total assets	7,453			7,158			10,450			9,866			9,618
Non-recourse vacation ownership debt ^(c)	2,541			2,357			2,098			2,141			2,106
Debt ^(c)	3,034			2,881			3,908			3,299			2,997
Total (deficit)/equity	(524		)	(569		)	774			633			864

Operating statistics:^(d)
Vacation Ownership
Gross VOI sales (in millions)	$	2,355		$	2,271		$	2,138		$	2,007		$	1,960
Tours (in 000s)	945			904			869			819			801
Volume Per Guest (“VPG”)	$	2,381		$	2,392		$	2,345		$	2,324		$	2,326
Vacation Exchange
Average number of members (in 000s)	3,887			3,847			3,799			3,852			3,831
Exchange revenue per member	$	166.54		$	171.04		$	176.74		$	172.56		$	173.59


^(a)	Includes Operating, Cost of vacation ownership interests, Consumer financing interest, Marketing, General and administrative, and Restructuring expenses.

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^(b)

Represents the ~~impact from acquisitions/dispositions from the acquisition/disposition dates forward. Therefore, the operating statistics for 2015 are not presented on a comparable basis~~portion of gross vacation ownership contract receivables, securitization restricted cash, and related assets that collateralize our non-recourse vacation ownership debt. Refer to Note 17—Variable Interest Entities to the ~~2014 operating statistics.~~Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further details.


^(b)(c)	~~Represents~~Reflects the ~~number of rooms at hotel group properties at the end~~impact of the ~~period which are under franchise and/or management agreements, or are company owned.~~adoption of accounting standards issued during 2016 related to the presentation of debt issuance costs.


^(c)(d)	~~Represents revenue per available room~~For additional details on the Company’s operating statistics see the “Operating Statistics” section included in Item 7 of this Annual Report on Form 10-K.

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ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BUSINESS AND OVERVIEW

We are a global provider of hospitality services and products and operate our business in the following two segments:


•	Vacation Ownership—develops, markets and ~~is calculated by multiplying~~sells vacation ownership interests (“VOIs”) to individual consumers, provides consumer financing in connection with the ~~percentage~~sale of ~~available rooms occupied during the period by the average rate charged for renting a hotel room for one day.~~VOIs, and provides property management services at resorts.


^(d) •	~~Represents members in our~~ Vacation Exchange—provides vacation exchange ~~programs who paid annual membership dues as~~services and products to owners of ~~the end of the period or within the allowed grace period.~~


^(e)VOIs.	Represents total annualized revenues generated from fees associated with memberships, exchange transactions, member-related rentals and other servicing for the period divided by the average number of vacation exchange members during the period.


^(f)	Represents the number of transactions that are generated in connection with customers booking their vacation rental stays through us. One rental transaction is recorded for each standard one-week rental.


^(g)	Represents the net rental price generated from renting vacation properties to customers and other related rental servicing fees during the period divided by the number of vacation rental transactions during the period.


^(h)	Represents total sales of VOIs, including sales under Wyndham Asset Affiliation Model (“WAAM”) Fee-for-Service, before the net effect of POC accounting and loan loss provisions. We believe that Gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.


⁽ⁱ⁾	~~The following table provides a reconciliation of Gross VOI sales to vacation ownership interest sales for the year ended December 31 (in millions):~~

European Vacation Rentals Business Sale

Hotel Business Spin-off

Alliance Reservations Network Acquisition

North American Vacation Rentals Business Sale

La Quinta Acquisition

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2015 2014
Gross VOI sales $ 1,965
$ 1,889
Less: WAAM Fee-for-Service sales ⁽¹⁾
(126 ) (132 )
Gross VOI sales, net of WAAM Fee-for-Service sales ⁽²⁾
1,838
1,757
Less: Loan loss provision (248 ) (260 )
Plus/(Less): Impact of POC accounting 13
(12 )
Vacation ownership interest sales $ 1,604
$ 1,485

Tax Cuts and Jobs Act

SEGMENT OVERVIEW

Vacation Ownership

We develop, market and sell VOIs to individual consumers, provide consumer financing in connection with the sale of VOIs, and provide property management services at resorts. Our sales of VOIs are either cash sales or developer-financed sales. Developer financed sales are typically collateralized by the underlying VOI. Revenue is recognized on VOI sales upon transfer of control, which is defined as the point in time when a binding sales contract has been executed, the financing contract has been executed for the remaining transaction price, the statutory rescission period has expired, and the transaction price has been deemed to be collectible.

For developer-financed sales, we reduce the VOI sales transaction price by an estimate of uncollectible consideration at the time of the sale. Our estimates of uncollectible amounts are based largely on the results of our static pool analysis which relies on historical payment data by customer class.

We provide day-to-day property management services including oversight of housekeeping services, maintenance, and certain accounting and administrative services for property owners’ associations and clubs. These services may also include reservation and resort renovation activities. Such agreements are generally for terms of one year or less, and are renewed automatically on an annual basis. Our management agreements contain cancellation clauses, which allow for either party to cancel the agreement, by either a majority board vote or a majority vote of non-developer interests. We receive fees for such property management services which are collected monthly in advance and are based upon total costs to operate such resorts (or as services are provided in the case of resort renovation activities). Fees for property management services typically approximate 10% of budgeted operating expenses. We are entitled to consideration for reimbursement of costs incurred on behalf of the property owners’ association in providing the management services (“reimbursable revenue”). These reimbursable costs principally relate to the payroll costs for management of the associations, club and resort properties where we are the employer and are reflected as a component of Operating expenses on the Consolidated Statements of Income. We reduce management fees for amounts paid to the property owners’ association that reflect maintenance fees for VOIs for which we retain ownership, as we have concluded that such payments are consideration payable to a customer.


⁽¹⁾	Represents total sales of VOIs through our WAAM Fee-for-Service sales model designed to offer turn-key solutions for developers or banks in possession of newly developed inventory, which we will sell for a commission fee through our extensive sales and marketing channels. WAAM Fee-for-Service commission revenues amounted to $83 million and $98 million during 2015 and 2014, respectively.


⁽²⁾	~~Amounts may not foot due to rounding.~~


^(j)	~~Represents the number of tours taken by guests in our efforts to sell VOIs.~~

^(k)

VPG is calculated by dividing Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) by the number of tours. Tele-sales upgrades were $100 million and $97 million during 2015 and 2014, respectively. We have excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. We believe that VPG provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the efficiency of the business’s tour selling efforts during a given reporting period.

4840

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~~Year Ended December 31, 2015 vs. Year Ended December 31, 2014~~Vacation Exchange

Our ~~consolidated results~~vacation exchange business derives a majority of revenues from membership dues and fees for facilitating members’ trading of their intervals. Revenues from membership dues represent the fees paid by members or affiliated clubs on their behalf. We recognize revenues from membership dues paid by the member on a straight-line basis over the membership period as the performance obligations are fulfilled through delivery of publications, if applicable, and by providing access to travel-related products and services. Estimated net contract consideration payable by affiliated clubs for memberships is recognized as ~~follows:~~

Year Ended December 31,
2015 2014 Favorable/(Unfavorable)
Net revenues $ 5,536
$ 5,281
$ 255
Expenses 4,521
4,340
(181 )
Operating income 1,015
941
74
Other (income)/expense, net (17 ) (7 ) 10
Interest expense 125
113
(12 )
Interest income (9 ) (10 ) (1 )
Income before income taxes 916
845
71
Provision for income taxes 304
316
12
Net income $ 612
$ 529
$ 83

~~Net revenues increased $255 million (4.8%) during 2015 compared~~revenue over the term of the contract with ~~2014. Foreign currency translation unfavorably impacted net revenues by $175 million. Excluding foreign currency translation, net revenues increased primarily from:~~

~~$168 million of higher revenues~~the affiliated club in proportion to the estimated average monthly member count. Such estimates are adjusted periodically for changes in the actual and forecasted member activity. For additional fees, members have the right to exchange their intervals for intervals at other properties affiliated with our vacation ~~ownership~~exchange networks and, for certain members, for other leisure-related services and products. We also derive revenue from facilitating bookings of travel accommodations for both members and non-members. Revenue is recognized when these transactions have been confirmed, net of expected cancellations.

Our vacation exchange business ~~primarily resulting~~also derives revenues from programs with affiliated resorts, club servicing, and loyalty programs; and additional exchange-related products that provide members with the ability to protect trading power or points, extend the life of deposits, and combine two or more deposits for the opportunity to exchange into intervals with higher ~~net VOI sales;~~trading power. Other vacation exchange related product fees are deferred and recognized as revenue upon the occurrence of a future exchange, other related transaction or event.

~~$132 million~~

Prior to the sale of ~~incremental~~our vacation rental businesses, we derived revenue ~~(inclusive of $106 million at our hotel group related to reimbursable fees which have no impact on EBITDA) resulting~~ from ~~acquisitions at our hotel group and destination network businesses;~~

~~$86 million of higher revenues at our destination network business primarily from stronger volume and yield on rental transactions; and~~

~~a $77 million increase (excluding intersegment revenues) at our hotel group business primarily from higher royalty, marketing and reservation (inclusive of Wyndham Rewards) revenues,~~ fees associated with ~~our global conference~~the rental of vacation properties managed and ~~higher revenues from ancillary services.~~

~~Such revenue increases were partially offset~~marketed by ~~the absence of $34 million of revenues from our U.K.-based camping business, which was sold during 2014.~~

~~Expenses increased $181 million (4.2%) during 2015 compared with 2014. Foreign currency favorably impacted expenses by $128 million. Excluding foreign currency, expenses increased primarily from:~~

~~$234 million of higher expenses from operations primarily related to the revenue increases;~~

~~$130 million of incremental expenses related to acquisitions at our hotel group and destination network businesses;~~

~~$14 million of costs associated with the anticipated termination of a management contract at our hotel group business;~~

$7 million of non-cash impairment charge resulting from the write-down of terminated in-process technology projects resulting from the decision to outsource its reservation system to a third-party partner at our hotel group business.

~~Such increases in expenses were partially offset by the absence of:~~

~~$51 million of expenses incurred at our U.K.-based camping business during 2014, which includes $31 million of operating expenses and a $20 million loss on the sale of such business;~~

~~$15 million of non-cash impairment charges during 2014 resulting from the write-down of equity investments at our hotel group and destination network businesses; and~~

~~a $10 million foreign exchange loss during 2014 at our destination network business related to the devaluation of the official exchange rate of Venezuela.~~

~~Other income, net increased $10 million compared with 2014 primarily from favorable settlements of business disruption claims received during 2015 related to the Gulf of Mexico oil spill in 2010.~~

Interest expense increased $12 million during 2015 compared with 2014 primarily due to a higher average effective interest rate resulting from the termination of interest rate swaps during the second quarter of 2015 and an increase in our long-term debt borrowings.

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During 2015, we reduced our valuation allowance and recognized foreign tax credit benefits from a realignment of certain foreign operations which resulted in a reduction of our effective tax rate from 37.4% in 2014 to 33.2% in 2015.

~~As a result of these items, net income increased $83 million (15.7%) as compared with 2014.~~

~~Following is a discussion of the 2015 results of each of our segments and Corporate and Other compared to 2014:~~

Net Revenues EBITDA
2015 2014 % Change 2015 2014 % Change
Hotel Group $ 1,297
$ 1,101
17.8 $ 349
^(b)
$ 327
^(f)
6.7
Destination Network 1,538
1,604
(4.1) 367
^(c)
335
^(g)
9.6
Vacation Ownership 2,772
2,638
5.1 687
^(d)
660
4.1
Total Reportable Segments 5,607
5,343
4.9 1,403
1,322
6.1
Corporate and Other ^(a)
(71 ) (62 ) (14.5) (137 )
^(e)
(141 )
^(h)
2.8
Total Company $ 5,536
$ 5,281
4.8 $ 1,266
$ 1,181
7.2

Reconciliation of EBITDA to Net Income

2015 2014
EBITDA $ 1,266
$ 1,181

Depreciation and amortization 234
233

Interest expense 125
113
⁽ⁱ⁾

Interest income (9 ) (10 )
Income before income taxes 916
845

Provision for income taxes 304
316

Net income $ 612
$ 529


^(a)	~~Includes the elimination of transactions between segments.~~

^(b)

Includes (i) $14 million of costs associated with the anticipated termination of a management contract, (ii) a $7 million non-cash impairment charge related to the write-down of terminated in-process technology projects resulting from the decision to outsource its reservation system to a third-party provider, (iii) $4 million of restructuring costs incurred as a result of an organizational realignment of brand services and call center operations, partially offset by a $1 million reversal of a portion of a restructuring reserve during 2015 and (iv) $3 million of costs incurred in connection with the Dolce acquisition.


^(c)	Includes $3 million of restructuring costs incurred as a result of a rationalization of our international operations, partially offset by a $1 million reversal of a portion of a restructuring reserve during 2015.


^(d)	~~Includes $1 million of restructuring costs incurred as a result of an organizational realignment of the sales function.~~


^(e)	~~Includes $137 million of corporate costs during 2015.~~

^(f)

Includes (i) an $8 million write-down of an investment in a joint venture, (ii) $4 million of costs associated with an executive’s departure and (iii) $2 million of restructuring costs incurred as a result of an organizational realignment initiative commenced during 2014, partially offset by a $1 million reversal of a portion of a restructuring reserve established during the fourth quarter of 2013.

^(g)

Includes (i) a $20 million loss on the sale of our U.K.-based camping business, (ii) a $10 million foreign currency loss related to the devaluation of the official exchange rate of Venezuela, (iii) $10 million of restructuring costs incurred as a result of an organizational realignment initiative commenced during 2014 and (iv) a $7 million non-cash impairment charge related to the write-down of an equity investment, partially offset by a $2 million benefit resulting from the reversal of a reserve for value-added taxes established during 2011.


^(h)	Includes $142 million of corporate costs during 2014 and $1 million of a net benefit during 2014 related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our Separation.


⁽ⁱ⁾	~~Includes a $2 million reversal of a reserve for value-added taxes established during 2011.~~

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~~Hotel Group~~

Net revenues increased $196 million (17.8%) and EBITDA increased $22 million (6.7%) during the twelve months ended December 31, 2015 compared with the same period during 2014. Foreign currency translation unfavorably impacted revenues and EBITDA by $12 million and $7 million, respectively.

~~Net revenues increased $29 million from royalty, marketing and reservation fees (inclusive of~~ Wyndham Rewards). Excluding the impact of a $12 million unfavorable impact from foreign currency translation and $13 million of incremental revenues from the Dolce acquisition, royalty, marketing and reservations fees (inclusive of Wyndham Rewards) increased $28 million. Excluding Dolce, domestic RevPAR increased 4.1% and global system size increased 1.8%. The increase in domestic RevPAR (excluding Dolce) was driven primarily by a 3.0% increase in average daily rates. International RevPAR (excluding Dolce) decreased by 12.7% principally due to unfavorable currency translation and the impact of room growth in lower RevPAR markets, specifically China.

Reimbursable revenues increased $119 million primarily from $106 million of incremental revenues from the Dolce acquisition. Such increase in revenues had no impact on EBITDA. Additionally, revenues were favorably impacted by $12 million of fees charged for our global conference which were fully offset by conference expenses.

Revenues from our owned hotels decreased $2 million and EBITDA increased $4 million. The revenue decrease was primarily due to the conversion of rooms into timeshare units at our Rio Mar property. The EBITDA increase was primarily the result of operating cost savings.

Net revenues and EBITDA were also favorably impacted by $16 million of higher intersegment licensing fees of which, $14 million is related to an increase in the rate charged to our vacation ownership business for the use of the Wyndham trade name.

Revenues and EBITDA from other franchise fees each increased $3 million primarily from higher property renewals and terminations. Ancillary services contributed an additional $19 million and $4 million of revenues and EBITDA, respectively. The revenues increase was primarily due to higher services provided to managed properties and growth in our co-branded credit card program, partially offset by the absence of $4 million of revenues resulting from the impact of a new co-branded credit card agreement executed during the third quarter of 2014. The EBITDA increase was primarily the result of the growth in our co-branded credit card program.

~~In addition, EBITDA was unfavorably impacted by:~~

~~$14 million of costs associated with the anticipated termination of a management contract;~~

~~$12 million of incremental expenses from Dolce, of which $3 million were related to integration and deal costs;~~

~~$9 million of higher marketing, reservation and Wyndham Rewards expenses resulting from the impact of the marketing and reservation revenue increases as we are obligated to spend such revenues~~Destinations, Inc. on behalf of ~~our franchisees;~~

~~a $7 million non-cash impairment charge related~~independent owners. We remitted the rental fee received from the renter to the ~~write-down~~independent owner, net of ~~terminated in-process technology projects resulting~~our agreed-upon fee. The related revenue from such fees, net of expected refunds, was recognized over the ~~decision~~renter’s stay. Our vacation rental businesses also derived revenues from additional services delivered to ~~outsource~~independent owners, vacation rental guests, and property owners’ associations which were generally recognized when the service was delivered.

Within our ~~reservation system~~Vacation Exchange segment, we measure operating performance using the following key operating statistics: (i) average number of vacation exchange members, which represents paid members in our vacation exchange programs who are current on their annual membership dues, or within the allowed grace period, and are entitled, for additional fees, to ~~a third-party provider during the third quarter of 2015;~~exchange their intervals for intervals at other properties affiliated with our exchange network and,

~~$3 million of restructuring charges.~~

~~Such decreases in EBITDA were partially offset by the absence of (i) an $8 million non-cash charge related to the write-down of an investment in a joint venture during the third quarter of 2014~~ for certain members, for other leisure-related services and products, and (ii) ~~$4 million of expenses~~exchange revenue per member, which represents total revenue from fees associated with ~~the departure of an executive during 2014.~~

As of December 31, 2015, we had over 7,810 properties and over 678,000 rooms in our system. Additionally, our hotel development pipeline included 890 hotels and over 119,300 rooms, of which 60% were international and 70% were new construction.

~~Destination Network~~

Net revenues decreased $66 million (4.1%) and EBITDA increased $32 million (9.6%) during the twelve months ended December 31, 2015 compared with 2014. Foreign currency translation unfavorably impacted net revenues and EBITDA by $129 million and $27 million, respectively. The divestiture of our U.K.-based camping business during 2014 unfavorably impacted revenues and EBITDA by $34 million and $3 million, respectively. In addition, EBITDA was favorably impacted by the absence of a $20 million loss on such divestiture.

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~~Our acquisitions of vacation rental brands contributed $11 million of incremental revenues (inclusive of $2 million of ancillary revenues) and $1 million of incremental EBITDA during 2015.~~

Net revenues generated from rental transactions and related services decreased $61 million. Excluding an unfavorable foreign currency translation impact of $102 million, a $34 million unfavorable impact from the divestiture and $9 million of incremental vacation rental revenues from acquisitions, net revenues generated from rental transactions and related services increased $66 million principally due to a 6.7% increase in rental transaction volume and a 1.1% increase in average net price per vacation rental. The increase in volume was driven by growth across all of our global vacation rental brands. The increase in average net price per vacation rental reflects higher pricing at our Netherlands-based Landal GreenParks brand and our North America brands, partially offset by the mix impact resulting from growth of lower priced accommodations at our U.K. cottage and parks brands.

~~Exchange and related service revenues, which principally consist of fees generated from~~ memberships, exchange transactions, ~~member-related rentals~~ and other member servicing decreased $18 million. Excluding an unfavorable foreign currency translation impact of $25 million, exchange and related service revenues increased $7 million primarily due to a 1.8% increase inservices for the period divided by the average number of vacation exchange members ~~principally~~during the period.

Other Items

In December 2019, a strain of coronavirus was reported to have surfaced in China, resulting ~~from new member growth~~ in ~~North America and Latin America. Such increase was partially offset~~travel bans invoked against Chinese residents. These travel bans, as well as cancellations by ~~a 0.7% decline in exchange revenue per member primarily~~non-Chinese customers due to concerns of the virus, have caused minor impacts to our operations in South Asia and Australia to date. Our annual revenues in South Asia and Australia represent approximately 6% of our total revenues. Although the impact has been minor to date, the extent to which the coronavirus may impact our financial condition or results of ~~growth~~operations is uncertain. We will continue to monitor events closely and work with heath authorities to ensure the safety of our owners, guests, and employees.

We record property management services revenues and RCI Elite Rewards revenues for our Vacation Ownership and Vacation Exchange segments in ~~club memberships in North America where there~~accordance with the guidance for reporting revenues gross as a principal versus net as an agent, which requires that these revenues be recorded on a gross basis.

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disposition of business, and items that meet the conditions of unusual and/or infrequent. We believe that Adjusted EBITDA is a ~~lower propensity to transact.~~

~~Additionally, ancillary revenues increased $12 million,~~useful measure of performance for our segments which, ~~includes a $10 million change~~when considered with the Generally Accepted Accounting Principles in the ~~classification~~U.S. (“GAAP”) measures, we believe gives a more complete understanding of ~~third-party sales commission fees~~our operating performance. Our presentation of Adjusted EBITDA may not be comparable to ~~operating expenses, which were previously reported as contra revenue in prior periods.~~similarly-titled measures used by other companies.

~~In addition, EBITDA was unfavorably impacted by:~~

~~$44 million of higher costs resulting from revenue increases across our vacation rentals brands;~~

~~a $13 million increase in employee-related expenses;~~

~~$4 million of higher information technology costs; and~~

~~$3 million from foreign exchange transactions and foreign exchange contracts.~~

~~Such expense increases were partially offset by:~~

~~the absence of a $10 million foreign exchange loss related to the devaluation of the official exchange rate of Venezuela during 2014;~~

~~$8 million of lower restructuring costs, which includes the absence of $10 million of such costs recorded during 2014, partially offset by $2 million recorded during 2015;~~

~~the absence of a $7 million non-cash impairment charge related to the write-down of an equity investment during 2014;~~

~~a $6 million favorable settlement of business disruption claims received related to the Gulf of Mexico oil spill in 2010; and~~

~~a $4 million benefit from a reserve reversal for value-added taxes resulting from a favorable ruling.~~

Vacation Ownership

Vacation Exchange

ITEM 3. LEGAL PROCEEDINGS

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II


ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Price of Common Stock

Issuer Purchases of Equity Securities

Below is a summary of our Wyndham Destinations common stock repurchases by month for the quarter ended December 31, 2019:



ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Dollar Value of Shares that May Yet Be Purchased Under the Publicly Announced Plan^(b)
October 2019 (October 1-31)	727,296	$	45.50	727,296	$	567,898,433
November 2019 (November 1-30)	1,292,200	47.10		1,292,200	507,032,494
December 2019 ^(a)(December 1-31)	620,910	50.08		620,910	476,073,903
Total^(a)	2,640,406	$	47.36	2,640,406	$	476,073,903


(a)	Includes 57,000 shares purchased for which the trade date occurred in December 2019 while settlement occurred in January 2020.

(b)

For a description of limitations on the payment of our dividends, see the “Dividends” section included in Item 7 of this Annual Report on Form 10-K.

Stock Performance Graph

The Stock Performance Graph is not deemed filed with the SEC and shall not be deemed incorporated by reference into any of our prior or future filings made with the SEC.

The following Stock Performance Graph compares the cumulative total stockholder return of our common stock against the cumulative total returns of the Standard & Poor’s Rating Services (“S&P”) Midcap 400 index and the S&P Hotels, Resorts & Cruise Lines index for the period from December 31, 2014, to December 31, 2019. The graph assumes that $100 was invested on December 31, 2014, and all dividends and other distributions were reinvested.

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COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN^(a)

Among Wyndham Destinations, the S&P Midcap 400 Index

and the S&P Hotels, Resorts, & Cruise Lines Index

^(a) $100 invested on December 31, 2014, in stock or index, including reinvestment of dividends.

Fiscal year ending December 31.



Cumulative Total Return
	12/14		12/15		12/16		12/17		12/18		12/19

Wyndham Destinations	$	100.00	$	86.48	$	93.47	$	145.28	$	103.11	$	154.73
S&P Midcap 400	$	100.00	$	97.82	$	118.11	$	137.30	$	122.08	$	154.07
S&P Hotels, Resorts & Cruise Lines	$	100.00	$	103.87	$	111.68	$	166.50	$	136.42	$	186.97

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

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ITEM 6. SELECTED FINANCIAL DATA



	As of or For the Year Ended December 31,
	2019			2018			2017			2016			2015
Income statement data (in millions):
Net revenues	$	4,043		$	3,931		$	3,806		$	3,692		$	3,657
Expenses
Operating and other ^(a)	3,106			3,051			3,000			2,907			2,888
Separation and related costs	45			223			26			—			—
Asset impairments	27			(4		)	205			—			—
Depreciation and amortization	121			138			136			127			119
Total expenses	3,299			3,408			3,367			3,034			3,007
Gain on sale of business	(68		)	—			—			—			—
Operating income	812			523			439			658			650
Other (income), net	(23		)	(38		)	(28		)	(21		)	(15		)
Interest expense	162			170			155			133			122
Early extinguishment of debt	—			—			—			11			—
Interest (income)	(7		)	(5		)	(6		)	(7		)	(8		)
Income before income taxes	680			396			318			542			551
Provision/(benefit) for income taxes	191			130			(328		)	190			173
Net income from continuing operations	489			266			646			352			378
(Loss)/income from operations of discontinued businesses, net of income taxes	—			(50		)	209			260			229
Gain on disposal of discontinued business, net of income taxes	18			456			—			—			—
Net income	507			672			855			612			607
Net income attributable to noncontrolling interest	—			—			(1		)	(1		)	—
Net income attributable to Wyndham Destinations shareholders	$	507		$	672		$	854		$	611		$	607

Per share data
Basic earnings per share
Continuing operations	$	5.31		$	2.69		$	6.26		$	3.19		$	3.21
Discontinued operations	0.19			4.11			2.03			2.37			1.94
	$	5.50		$	6.80		$	8.29		$	5.56		$	5.15

Basic weighted average shares outstanding (in millions)	92.1			98.9			103.0			109.9			118.0

Diluted earnings per share
Continuing operations	$	5.29		$	2.68		$	6.22		$	3.17		$	3.18
Discontinued operations	0.19			4.09			2.02			2.35			1.92
	$	5.48		$	6.77		$	8.24		$	5.52		$	5.10

Diluted weighted average shares outstanding (in millions)	92.4			99.2			103.7			110.6			119.0

Dividends
Cash dividends declared per share	$	1.80		$	1.89		$	2.32		$	2.00		$	1.68

Balance sheet data (in millions):
Securitized assets ^(b)	$	3,121		$	3,028		$	2,680		$	2,601		$	2,576
Total assets	7,453			7,158			10,450			9,866			9,618
Non-recourse vacation ownership debt ^(c)	2,541			2,357			2,098			2,141			2,106
Debt ^(c)	3,034			2,881			3,908			3,299			2,997
Total (deficit)/equity	(524		)	(569		)	774			633			864

Operating statistics:^(d)
Vacation Ownership
Gross VOI sales (in millions)	$	2,355		$	2,271		$	2,138		$	2,007		$	1,960
Tours (in 000s)	945			904			869			819			801
Volume Per Guest (“VPG”)	$	2,381		$	2,392		$	2,345		$	2,324		$	2,326
Vacation Exchange
Average number of members (in 000s)	3,887			3,847			3,799			3,852			3,831
Exchange revenue per member	$	166.54		$	171.04		$	176.74		$	172.56		$	173.59


^(a)	Includes Operating, Cost of vacation ownership interests, Consumer financing interest, Marketing, General and administrative, and Restructuring expenses.

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^(b)	Represents the portion of gross vacation ownership contract receivables, securitization restricted cash, and related assets that collateralize our non-recourse vacation ownership debt. Refer to Note 17—Variable Interest Entities to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further details.


^(c)	Reflects the impact of the adoption of accounting standards issued during 2016 related to the presentation of debt issuance costs.


^(d)	For additional details on the Company’s operating statistics see the “Operating Statistics” section included in Item 7 of this Annual Report on Form 10-K.

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ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BUSINESS AND OVERVIEW

We are a global provider of hospitality services and products and operate our business in the following two segments:


•	Vacation Ownership—develops, markets and sells vacation ownership interests (“VOIs”) to individual consumers, provides consumer financing in connection with the sale of VOIs, and provides property management services at resorts.


•	Vacation Exchange—provides vacation exchange services and products to owners of VOIs.

European Vacation Rentals Business Sale

Hotel Business Spin-off

Alliance Reservations Network Acquisition

North American Vacation Rentals Business Sale

La Quinta Acquisition

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Tax Cuts and Jobs Act

SEGMENT OVERVIEW

Vacation Ownership

We provide day-to-day property management services including oversight of housekeeping services, maintenance, and certain accounting and administrative services for property owners’ associations and clubs. These services may also include reservation and resort renovation activities. Such agreements are generally for terms of one year or less, and are renewed automatically on an annual basis. Our management agreements contain cancellation clauses, which allow for either party to cancel the agreement, by either a majority board vote or a majority vote of non-developer interests. We receive fees for such property management services which are collected monthly in advance and are based upon total costs to operate such resorts (or as services are provided in the case of resort renovation activities). Fees for property management services typically approximate 10% of budgeted operating expenses. We are entitled to consideration for reimbursement of costs incurred on behalf of the property owners’ association in providing the management services (“reimbursable revenue”). These reimbursable costs principally relate to the payroll costs for management of the associations, club and resort properties where we are the employer and are reflected as a component of Operating expenses on the Consolidated Statements of Income. We reduce management fees for amounts paid to the property owners’ association that reflect maintenance fees for VOIs for which we retain ownership, as we have concluded that such payments are consideration payable to a customer.

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Vacation Exchange

Our vacation exchange business also derives revenues from programs with affiliated resorts, club servicing, and loyalty programs; and additional exchange-related products that provide members with the ability to protect trading power or points, extend the life of deposits, and combine two or more deposits for the opportunity to exchange into intervals with higher trading power. Other vacation exchange related product fees are deferred and recognized as revenue upon the occurrence of a future exchange, other related transaction or event.

Prior to the sale of our vacation rental businesses, we derived revenue from fees associated with the rental of vacation properties managed and marketed by Wyndham Destinations, Inc. on behalf of independent owners. We remitted the rental fee received from the renter to the independent owner, net of our agreed-upon fee. The related revenue from such fees, net of expected refunds, was recognized over the renter’s stay. Our vacation rental businesses also derived revenues from additional services delivered to independent owners, vacation rental guests, and property owners’ associations which were generally recognized when the service was delivered.

Within our Vacation Exchange segment, we measure operating performance using the following key operating statistics: (i) average number of vacation exchange members, which represents paid members in our vacation exchange programs who are current on their annual membership dues, or within the allowed grace period, and are entitled, for additional fees, to exchange their intervals for intervals at other properties affiliated with our exchange network and, for certain members, for other leisure-related services and products, and (ii) exchange revenue per member, which represents total revenue from fees associated with memberships, exchange transactions, and other services for the period divided by the average number of vacation exchange members during the period.

Other Items

In December 2019, a strain of coronavirus was reported to have surfaced in China, resulting in travel bans invoked against Chinese residents. These travel bans, as well as cancellations by non-Chinese customers due to concerns of the virus, have caused minor impacts to our operations in South Asia and Australia to date. Our annual revenues in South Asia and Australia represent approximately 6% of our total revenues. Although the impact has been minor to date, the extent to which the coronavirus may impact our financial condition or results of operations is uncertain. We will continue to monitor events closely and work with heath authorities to ensure the safety of our owners, guests, and employees.

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OPERATING STATISTICS



	Year Ended December 31,
	2019		2018		% Change ^(g)
Vacation Ownership ^(a)
Gross VOI sales (in millions) ^{(b) (h)}	$	2,355	$	2,271	3.7
Tours (in 000s) ^(c)	945		904		4.5
Volume Per Guest (“VPG”) ^(d)	$	2,381	$	2,392	(0.4)
Vacation Exchange ^(a)
Average number of members (in 000s) ^(e)	3,887		3,847		1.0
Exchange revenue per member ^(f)	$	166.54	$	171.04	(2.6)


^(a)	Includes the impact from acquisitions from the acquisition dates forward.


^(b)	Represents total sales of VOIs, including sales under the Fee-for-Service program, before the effect of loan loss provisions. We believe that Gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.


^(c)	Represents the number of tours taken by guests in our efforts to sell VOIs.

^(d)


^(e)	Represents paid members in our vacation exchange programs who are current on their annual membership dues or within the allowed grace period.


^(f)	Represents total revenues generated from fees associated with memberships, exchange transactions, and other servicing for the period divided by the average number of vacation exchange members during the period.


^(g)	Change percentages may not calculate due to rounding.


^(h)	The following table provides a reconciliation of Vacation ownership interest sales, net to Gross VOI sales for the years ended December 31, (in millions):



	2019		2018
Vacation ownership interest sales, net	$	1,848	$	1,769
Loan loss provision	479		456
Gross VOI sales, net of Fee-for-Service sales	2,327		2,225
Fee-for-Service sales⁽¹⁾	28		46
Gross VOI sales	$	2,355	$	2,271


⁽¹⁾	Represents total sales of VOIs through our Fee-for-Service programs where inventory is sold through our sales and marketing channels for a commission. Fee-for-Service commission revenues were $18 million and $31 million during 2019 and 2018. These commissions are reported within Service and membership fees on the Consolidated Statements of Income.

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RESULTS OF OPERATIONS

Our consolidated results for the years ended December 31, 2019, versus December 31, 2018, are as follows (in millions):



	Year Ended December 31,
	2019			2018			Favorable/ (Unfavorable)
Net revenues	$	4,043		$	3,931		$	112
Expenses	3,299			3,408			109
Gain on sale of business	(68		)	—			68
Operating income	812			523			289
Other (income), net	(23		)	(38		)	(15		)
Interest expense	162			170			8
Interest (income)	(7		)	(5		)	2
Income before income taxes	680			396			284
Provision for income taxes	191			130			(61		)
Net income from continuing operations	489			266			223
Loss from operations of discontinued businesses, net of income taxes	—			(50		)	50
Gain on disposal of discontinued business, net of income taxes	18			456			(438		)
Net income attributable to Wyndham Destinations shareholders	$	507		$	672		$	(165	)

Net revenues ~~and EBITDA~~ increased ~~$134~~$112 million ~~(5.1%) and $27 million (4.1%), respectively,~~ during ~~the twelve months ended December 31, 2015~~2019 compared with 2018. Revenue growth of $133 million (3.4%) was offset by unfavorable foreign currency impact of $21 million (0.5%). Excluding foreign currency impact, the ~~same period of 2014. Foreign currency translation unfavorably impacted~~increase in net revenues was the result of:

$149 million of higher revenues in our vacation ownership business due to an increase in net VOI sales, property management, and consumer financing revenues; partially offset by

$13 million decrease in revenues in our vacation exchange business driven by the sale of North American vacation rentals in October 2019 and the loss of Wyndham Hotels servicing revenues as a result of the Spin-off; partially offset by increases in ancillary revenues driven by the acquisition of ARN.

Expenses decreased $109 million during 2019 compared with 2018. The decrease in expenses of $94 million (2.8%) was impacted by favorable foreign currency of $15 million (0.4%). Excluding foreign currency impact, the decrease in expenses was the result of:

$178 million decrease in separation costs related to the Spin-off of Wyndham Hotels;

$35 million decrease in costs as a result of the sale of the North American vacation rentals business in October 2019;

$17 million decrease in depreciation and amortization primarily due to the conveyance of a portion of the Wyndham Worldwide Corporation headquarters to Wyndham Hotels at Spin-off and the designation of North American vacation rentals as held-for-sale and the subsequent sale of this business; partially offset by

$67 million increase in marketing costs driven by our Vacation Ownership segment as a result of higher tour volume and an increase in licensing fees for the use of the Wyndham tradename;

$31 million increase in non-cash impairment charges driven by a loss on sale of inventory in 2019;

$27 million increase in expenses from operating activities primarily driven by higher revenues at our Vacation Ownership segment, partially offset by lower operating costs associated with lower revenues at our Vacation Exchange segment; and

$25 million increase in operating expenses related to the ARN acquisition.

Gain on sale of business was $68 million during 2019 due to the sale of the North American vacation rentals business.

Other income, net of other expense decreased $15 million during 2019 compared with 2018, due to value-added tax refunds in 2018.

Interest expense decreased $8 million during 2019 compared with 2018 due to lower average outstanding revolving credit facility balances.

Our effective tax rate was 28.1% in 2019 compared to 32.8% in 2018. The 2018 effective tax rate was higher due to significant increases in the valuation allowance related to foreign tax credits and net operating losses.

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Our 2019 results of operations reflect a negative impact from hurricane Dorian. We estimate that the hurricane reduced revenues, Adjusted EBITDA, and net income by ~~$34~~$20 million, $11 million, and $8 million. Our 2018 results of operations reflect the negative impact from 2018 hurricanes Florence and Michael, and the lingering effects of 2017 hurricane Maria. We estimate that the 2018 hurricanes reduced revenues, Adjusted EBITDA, and net income by $23 million, $16 million, and $11 million. Additionally, we estimate that hurricane Maria reduced 2018 revenues, Adjusted EBITDA, and net income by $12 million, ~~respectively.~~$11 million, and $7 million.

During 2018, there was a loss from operations of discontinued businesses, net of income taxes of $50 million associated with the completion of the Spin-off and the sale of the European vacation rentals business.

Gain on disposal of discontinued businesses, net of income taxes was $18 million during 2019 mainly due to tax benefits associated with additional foreign tax credit utilization, lower than anticipated state income taxes, and the release of funds held in escrow related to the sale of the European vacation rentals business in 2018. The $456 million gain recognized in 2018 represents the gain on sale of the European vacation rentals business.

As a result of these items, Net income attributable to Wyndham Destinations shareholders decreased $165 million (24.6%) in 2019 as compared with 2018.

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Following is a discussion of the 2019 results of each of our segments compared to 2018 (in millions):



	Year Ended December 31,
Net revenues	2019			2018
Vacation Ownership	$	3,151		$	3,016
Vacation Exchange	898			918
Total reportable segments	4,049			3,934
Corporate and other ^(a)	(6		)	(3		)
Total Company	$	4,043		$	3,931

	Year Ended December 31,
Reconciliation of Net income to Adjusted EBITDA	2019			2018
Net income attributable to Wyndham Destinations shareholders	$	507		$	672
Gain on disposal of discontinued business, net of income taxes	(18		)	(456		)
Loss from operations of discontinued businesses, net of income taxes	—			50
Provision for income taxes	191			130
Depreciation and amortization	121			138
Interest expense	162			170
Interest (income)	(7		)	(5		)
Gain on sale of business	(68		)	—
Separation and related costs ^(b)	45			223
Restructuring	9			16
Asset impairments	27			(4		)
Legacy items ^(c)	1			1
Acquisition and divestiture related costs	1			—
Stock-based compensation	20			23
Value-added tax refund	—			(16		)
Adjusted EBITDA	$	991		$	942

	Year Ended December 31,
Adjusted EBITDA	2019			2018
Vacation Ownership	$	756		$	731
Vacation Exchange	289			278
Total reportable segments	1,045			1,009
Corporate and other ^(a)	(54		)	(67		)
Total Company	$	991		$	942


^(a)	Includes the elimination of transactions between segments.


^(b)	Includes $4 million and $105 million of stock based compensation expenses for the years ended 2019 and 2018.


^(c)	Represents the resolution of and adjustment to certain contingent liabilities resulting from our separation from Cendant.

Vacation Ownership

Net ~~VOI~~ revenues increased ~~$119~~$135 million and Adjusted EBITDA increased $25 million during 2019 compared ~~to the same period last year. Excluding an~~with 2018. Revenue growth of $149 million (4.9%) was offset by unfavorable foreign currency ~~translation~~ impact of ~~$26~~$14 million ~~net VOI revenues increased $145~~(0.5%). Adjusted EBITDA growth of $30 million ~~primarily due to (i) higher~~(4.1%) was offset by unfavorable foreign currency impact of $5 million (0.7%).

Net revenue growth excluding the impact of currency was driven by:

$111 million increase in gross VOI sales, ~~and (ii)~~net of Fee-for-Service sales, driven by a ~~$12~~4.5% increase in tours, resulting from our continued focus on new owner generation; partially offset by a $23 million ~~decrease~~increase in our provision for loan losses due to ~~a lower provision rate resulting from a continuation of favorable default trends. Gross~~higher gross VOI sales ~~increased $76~~and the impact of higher defaults;

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$40 million ~~(4.0%) compared~~increase in property management revenues due to higher management fees;


•	$26 million increase in consumer financing revenues due to a higher weighted average interest rate earned on a larger average portfolio balance; and

$4 million increase in ancillary revenues; partially offset by

$14 million decrease in commission revenues as a result of lower Fee-for-Service VOI sales.

In addition to the ~~same period last year, primarily~~drivers mentioned above, Adjusted EBITDA excluding the impact of currency was further impacted by:

$63 million increase in marketing costs due to ~~a 3.1% increase in VPG primarily attributable to~~higher tour volume and an increase in ~~higher average transaction size and a 0.9% increase in tours. Excluding an unfavorable foreign currency translation impact~~licensing fees for the use of ~~$27 million, gross VOI sales increased 5% compared to 2014.~~the Wyndham tradename;

EBITDA increased $76 million from VOI-related operations primarily due to (i) the net VOI revenue increase of $119 million, (ii) $12 million from other VOI-activities primarily related to entry-level sales programs such as our sampler program and (iii) a $6 million reduction in the cost of VOIs sold primarily due to lower product costs. Such increases in EBITDA were partially offset by $44$34 million of higher sales and commission expenses ~~primarily~~ due to ~~the~~higher gross VOI sales;

$17 million increase in ~~VOI sales and $17 million of higher marketing costs principally due to an increase in costs for tours targeting new owner generation.~~

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Commission revenues and EBITDA generated from WAAM Fee-for-Service decreased $15 million and $19 million, respectively, compared to the prior year, primarily from a lower average commission rate earned resulting from a change in the mix of product sold and lower VOI sales under WAAM Fee-for-Service as we continue to shift our focus to the WAAM Just-in-Time inventory sourcing model.

~~Consumer~~consumer financing revenues were flat and EBITDA decreased by $3 million compared to the same period last year. Excluding an unfavorable foreign currency translation impact of $6 million, revenues and EBITDA increased $6 million and $3 million, respectively. The revenue growth was due to a higher weighted average interest rate earned on contract receivables partially offset by a lower average portfolio balance. EBITDA was also impacted by higher interest expense resulting from an increase in the ~~average securitized debt balance partially offset by a reduction in the~~ weighted average interest rate and a higher average loan balance on our ~~securitized debt to 3.5% from 3.7%. Our net interest income margin~~non-recourse debt;

$4 million increase in property management expenses;

$4 million increase in the cost of VOIs sold driven by higher gross VOI sales; and

$3 million increase in maintenance fees on unsold inventory; partially offset by

$12 million decrease in commission expenses as a result of lower Fee-for-Service VOI sales.

Vacation Exchange

Net revenues decreased ~~to 82.8% compared to 83.4% during 2014.~~

~~Property management revenues~~$20 million and Adjusted EBITDA increased $11 million during 2019 compared with 2018. Revenue decrease of $13 million (1.4%) was impacted by ~~$34~~unfavorable foreign currency of $7 million ~~and~~(0.8%). Adjusted EBITDA growth of $16 million (5.8%) was offset by unfavorable foreign currency of $5 million ~~respectively, compared to~~(1.8%).

Decreases in net revenues excluding the ~~prior year primarily due to higher reimbursable revenues.~~

~~In addition, EBITDA was unfavorably impacted~~impact of currency were driven by:

$17 million ~~of higher maintenance fees for unsold inventory;~~

~~a $16 million increase~~decrease in ~~intersegment licensing fees charged from the hotel group business for the use of the Wyndham tradename; and~~

~~the absence of a $4 million reversal of a reserve during 2014 which was established as the result of an acquisition made in a previous year.~~

~~Such decreases in EBITDA were partially offset by the absence of a $5 million reserve recorded during 2014 on an indemnification receivable established~~vacation rentals revenue as a result of the ~~Shell acquisition.~~sale of the North American vacation rentals business in October 2019;

$4 million net decrease in exchange and related service revenues driven by a change in customer mix, lower inventory levels, and higher other product revenue; partially offset by

$8 million net increase in ancillary revenues driven by $27 million at our newly-acquired ARN business; partially offset by the $13 million loss of ancillary revenue generated by the North American vacations rentals business and the $6 million loss of Wyndham Hotels servicing revenues which were discontinued as a result of the Spin-off.

In addition to the drivers mentioned above, 2019 Adjusted EBITDA, excluding the impact of currency, was further impacted by:

$35 million decrease in costs due to the sale of the North American vacation rentals business in October 2019;

$10 million decrease in general and administrative expenses due to lower information technology costs and employee-related costs; and

$9 million of cost reductions associated with lower exchange and related service revenues; partially offset by

$25 million of increased revenue-related expenses at our newly-acquired ARN business.

Corporate and ~~Other~~

other

Corporate and ~~Other revenues, which represents the elimination~~other Adjusted EBITDA increased $13 million during 2019 compared with 2018. Adjusted EBITDA growth of ~~intersegment revenues primarily charged between our vacation ownership and hotel group businesses, decreased~~ $9 million ~~during 2015 compared to 2014.~~

~~Corporate expenses (excluding intercompany expense eliminations) decreased~~(13.4%) was impacted by favorable foreign currency of $4 million ~~during 2015 compared to the prior year~~(6.0%). The remaining growth in Adjusted EBITDA was primarily due to lower ~~professional fees, partially~~employee-related costs as a result of a smaller corporate presence after the Spin-off of Wyndham Hotels.

For comparative review of our consolidated results of operations and the results of operations of our reportable segments for the fiscal years ended December 31, 2018 and 2017, refer to Part II, Item 7 of our Annual Report filed on Form 10-K with the Securities and Exchange Commission (“SEC”) on February 26, 2019.

DISCONTINUED OPERATIONS

We sold our European vacation rentals business on May 9, 2018. This sale resulted in final net proceeds of $1.06 billion and a 2018 after-tax gain of $456 million, net of $139 million in taxes. During 2019 we recognized an additional $18 million gain, related to $12 million of tax benefits associated with additional foreign tax credit utilization and lower than anticipated state income taxes, as well as $6 million in returned escrow for an expired guarantee and other changes in expired guarantees. We have provided post-closing credit support in order to ensure that Compass meets the requirements of certain service providers

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and regulatory authorities. The results of operations of this business have been classified as discontinued operations on the Consolidated Financial Statements.

We completed the Spin-off of our hotel business on May 31, 2018, which resulted in our operations being held by two separate, publicly traded companies. The two public companies have entered into long-term exclusive license agreements to retain their affiliations with one of the industry’s top-rated loyalty programs, Wyndham Rewards, as well as to continue to collaborate on inventory-sharing and customer cross-sell initiatives. As a result of the Spin-off, we have classified the results of operations of our hotel business as discontinued operations on the Consolidated Financial Statements.

During 2018 there was a $50 million loss from operations of discontinued businesses, net of taxes. Income from operations of discontinued businesses, net of taxes was $209 million during 2017. Separation and related costs from discontinued operations was $111 million and $40 million in 2018 and 2017.

SEPARATION AND TRANSACTION COSTS

During 2019, we incurred $45 million of expenses in connection with the Spin-off completed on May 31, 2018, which are reflected within continuing operations. These separation costs were related to stock compensation, severance and other employee costs, as well as impairment charges due to the write-off of right-of-use assets and furniture, fixtures and equipment as a result of our abandoning portions of our administrative offices in New Jersey. This decision was part of our continued focus on rationalizing existing facilities in order to reduce our corporate footprint. These expenses also include additional impairment charges associated with the write-off of assets and liabilities related to the early termination of an operating lease in Chicago, Illinois, offset by an ~~increase~~indemnification receivable from Wyndham Hotels. Refer to Note 13—Leases to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional detail regarding these impairments.

During 2018, we incurred $223 million of expenses in connection with the Spin-off which are reflected within continuing operations and include related costs of the Spin-off, of which $217 million were related to stock compensation modification expense, severance and other employee costs offset, in part, by favorable foreign currency. In addition, these costs include certain impairment charges related ~~costs.~~to the separation including property sold to Wyndham Hotels.

Additionally, during 2018, we incurred $111 million of separation related expenses in connection with the Spin-off and sale of the European vacation rentals business which are reflected within discontinued operations. These expenses include legal, consulting and auditing fees, stock compensation modification expense, severance and other employee-related costs.

During 2017, we incurred $26 million of expenses associated with the planned Spin-off and the exploration of strategic alternatives for the European vacation rentals business which are reflected within continuing operations. Additionally, during 2017 we also incurred $40 million of separation related costs that are included within discontinued operations. These costs include legal, consulting and auditing fees, stock compensation modification expense, severance and other employee-related costs.

RESTRUCTURING PLANS

During ~~2016,~~2019, we recorded ~~$15~~$5 million of charges related to restructuring initiatives, most of which are personnel-related resulting from a reduction of approximately 100 employees. This action is primarily focused on enhancing organizational efficiency and rationalizing ~~existing facilities including the closure~~operations. The charges consisted of ~~four vacation ownership sales offices. In connection with these initiatives, we initially recorded $12 million of personnel-related costs, a~~(i) $2 million ~~non-cash charge and~~at our Vacation Ownership segment, (ii) $2 million ~~of facility-related expenses. We subsequently reversed~~at our Vacation Exchange segment, and (iii) $1 million of previously recorded personnel-related costs and reduced our liability with $5 million of cash payments. The remaining liability of $8 million as of December 31, 2016 is expected to be paid primarily by the end of 2017. We anticipate annual net savings from such initiatives to be $21 million.

During 2015, we recorded $6 million of costs associated with restructuring activities focused on a realignment of brand services and call center operations within our hotel group business, a rationalization of international operations within our destination network business and a reorganization of the sales function within our vacation ownership business. In connection with these initiatives, we initially recorded $7 million of personnel-related costs and a $1 million non-cash asset impairment charge associated with a facility. We subsequently reversed $2 million of previously recorded personnel-related costs and reduced our liability with $2 million of cash payments. During 2016, we reduced our remaining liability with $3 million of cash payments.

~~During 2014, we implemented restructuring initiatives~~ at our ~~destination network and hotel group businesses, primarily focused on improving~~corporate operations. We reduced the alignment of the organizational structure of each business with their strategic objectives. In connection with these initiatives, we recorded $6 million of personnel-related costs, a $5 million non-cash charge to write-off information technology assets andrestructuring liability by $1 ~~million of costs related to contract terminations. During 2015, we reduced our remaining liability with $6~~ million of cash payments ~~and reversed $1 million related to previously recorded contract termination costs.~~

~~We have additional restructuring plans which were implemented prior to 2014. During 2016, we reduced our remaining liability for such plans with $1 million of cash payments.~~during 2019. The remaining 2019 restructuring liability of $1$4 million ~~as of December 31, 2016, all of which is related to leased facilities,~~ is expected to be paid by ~~2020.~~the end of 2021.

During 2018, we recorded $16 million of charges related to restructuring initiatives, all of which are personnel-related resulting from a reduction of approximately 500 employees. This action was primarily focused on enhancing organizational efficiency and rationalizing operations. The charges consisted of (i) $11 million at our Vacation Ownership segment, (ii) $4 million at our Vacation Exchange segment, and (iii) $1 million at our corporate operations. During 2019, we incurred an additional $3 million of restructuring expenses at our Vacation Ownership segment and an additional $1 million at our corporate operations. We reduced the restructuring liability by $13 million and $4 million of cash payments during 2019 and 2018. The remaining 2018 restructuring liability of $3 million is expected to be paid by the end of 2021.

During 2017, we recorded $14 million of charges related to restructuring initiatives, all of which were personnel-related resulting from a reduction of approximately 200 employees. The charges consisted of (i) $8 million at our Vacation Exchange segment which primarily focused on enhancing organizational efficiency and rationalizing our operations, and (ii) $6 million at

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our corporate operations which focused on rationalizing our sourcing function and outsourcing certain information technology functions. During 2017, we reduced the restructuring liability by $11 million, of which $10 million was in cash payments and $1 million was through the issuance of Wyndham Worldwide Corporation stock. During 2018, we further reduced the restructuring liability by $3 million of cash payments. The 2017 restructuring liability was paid in full as of December 31, 2018.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

~~FINANCIAL CONDITION~~Financial Condition


	December 31, 2016		December 31, 2015		Change
(In millions)								December 31, 2019			December 31, 2018			Change
Total assets	$	9,819	$	9,591	$	228		$	7,453		$	7,158		$	295
Total liabilities	9,101		8,638		463			7,977			7,727			250
Total equity	718		953		(235		)
Total deficit								(524		)	(569		)	45



Year	Occupancy	ADR		RevPAR (*)
2011	60.0%	$	101.77	$	61.06
2012	61.4%	106.05		65.13
2013	62.3%	110.03		68.51
2014	64.4%	115.14		74.12
2015	65.4%	120.30		78.68
2016	65.5%	123.97		81.19
2017 Estimate	65.3%	127.21		83.09



Brand	Primary Segment ^(a)	Total Hotels	Rooms
Brand	Primary Segment ^(a)	Total Hotels	Total	North America ^(b)	Latin America	EMEA	Asia/Pacific	RevPAR
	Economy	2,793	177,191	106,101	350	422	70,318	$	27.84
	Economy	1,792	143,610	124,306	231	3,777	15,296	34.44
	Midscale	866	120,809	53,594	4,471	31,458	31,286	39.50
	Upscale	247	54,143	26,387	8,834	6,920	12,002	60.44
	Economy	369	42,346	21,105	2,824	243	18,174	30.47
	Midscale	436	34,614	34,496	118	—	—	36.57
	Economy	402	29,604	29,604	—	—	—	35.74
	Economy	336	24,224	22,705	595	—	924	39.55
	Economy	377	22,912	22,912	—	—	—	22.90
	Upper Midscale	115	16,370	353	2,934	13,018	65	51.06
	Midscale	149	13,703	13,527	176	—	—	56.84
	Midscale	111	10,959	10,307	—	652	—	54.60
	Upper Upscale	21	4,951	3,655	—	1,296	—	85.17
	Upper Midscale	11	1,464	—	1,464	—	—	53.39
	Upper Midscale	10	707	—	707	—	—	51.29
Total		8,035	697,607	469,052	22,704	57,786	148,065	$	36.67



	# of	# of
Region	Properties	Rooms	Occupancy		ADR		RevPAR ^(a)
United States ^(b)	5,525	429,020	53.0	%	$	75.05	$	39.77
Canada	506	40,032	50.8	%	78.44		39.84
Europe/Middle East/Africa	409	57,786	62.3	%	75.79		47.18
Asia/Pacific ^(c)	1,406	148,065	56.9	%	38.78		22.06
Latin America	189	22,704	51.2	%	63.13		32.33
Total	8,035	697,607	54.4	%	67.44		36.67



	As of December 31,
	2016		2015		2014
	Properties	Rooms	Properties	Rooms	Properties	Rooms
Economy	6,069	439,887	5,941	431,885	5,875	430,803
Midscale	1,562	180,085	1,502	174,753	1,456	169,193
Upper Midscale	136	18,541	121	17,355	119	16,965
Upscale	247	54,143	225	48,753	195	43,865
Upper Upscale	21	4,951	23	5,296	—	—
Total	8,035	697,607	7,812	678,042	7,645	660,826



	As of December 31,
	2016				2015				2014
	Properties		Rooms		Properties		Rooms		Properties		Rooms
Beginning balance	7,812		678,042		7,645		660,826		7,485		645,423
Additions ^(*)	664		62,401		643		65,807		619		61,657
Terminations	(441	)	(42,836	)	(476	)	(48,591	)	(459	)	(46,254	)
Ending balance	8,035		697,607		7,812		678,042		7,645		660,826



1990	1992	1993	1996
Howard Johnson	Days Inn	Super 8	Resort Condominiums International (RCI)
Ramada (US)			Travelodge North America
2001	2002	2004	2005
Wyndham Vacation Resorts	WorldMark by Wyndham	Landal GreenParks	Wyndham Hotels and Resorts
Holiday Cottages Group	Novasol	Ramada International
Cuendet
2006	2008	2010	2011
Baymont Inn and Suites	Microtel Inns and Suites by Wyndham	Hoseasons	The Resort Company
	Hawthorn Suites by Wyndham	ResortQuest	Bahama Bay/Caribe Cove
		James Villa Holidays
		TRYP by Wyndham
2012	2013	2014	2015
Shell Vacations Club	Midtown 45, NYC Property	Raintree Vacation Club (5 Properties)	Dolce Hotels and Resorts
Wyndham Grand Rio Mar Hotel	Cumbrian Cottages	Shoal Bay Resort	Vacation Palm Springs
Oceana Resorts		Hatteras Realty, Inc.	Sea Pearl Resorts
Smoky Mountain Property Management			ResortQuest Whistler
2016
Fen Hotels
Blue Chip Holidays
Dayz ApS



		Room Supply	Revenues		Brand
Region	Hotels	(millions)	(billions)		Affiliation
United States/Canada	60,289	5.5	$	161	70	%
Europe	61,206	4.5	142		40	%
Asia Pacific	33,082	4.3	110		52	%
Latin America/Middle East	17,345	1.9	55		43	%



	Domestic		International
	Resorts	Units	Resorts	Units	Total Resorts	Total Units
Club Wyndham	103	13,696	33	1,646	136	15,342
WorldMark by Wyndham	87	7,055	10	575	97	7,630
Presidential Reserve by Wyndham	18	392	—	—	18	392
Shell Vacations Club	22	1,934	3	292	25	2,226
Margaritaville Vacation Club	3	238	—	—	3	238
Total (including dual-branded resorts)	233	23,315	46	2,513	279	25,828
Less: dual-branded resorts					(49)
Total resorts					230


^(a)	This reflects the primary chain scale segments served using the STR Global definition and method as of December 2016. STR Global is U.S. centric and categorizes a hotel chain, or brand, based on ADR in the U.S. We utilized these chain scale segments to classify our brands both in the U.S. and internationally.


^(a)	~~RevPAR may not recalculate by multiplying occupancy by ADR due to rounding.~~


^(c)	~~China represents 91% of the total region with the majority of our hotels in China being under master franchise agreements.~~


^(*)	~~During 2016, 65% of our room additions were conversions. Acquisitions accounted for 2,171 and 5,530 room additions during 2016 and 2015, respectively.~~


4.	~~Inventory reclaimed from owners’ associations or owners.~~


•	the supply and demand for vacation ownership services and products and exchange services and products;



2016	High		Low
First Quarter	$	80.79	$	61.63
Second Quarter	78.00		65.40
Third Quarter	77.22		66.81
Fourth Quarter	77.88		63.32



	12/11	12/12	12/13	12/14	12/15	12/16
Wyndham Worldwide Corporation	100.00	143.33	202.16	239.59	207.19	223.95
S&P 500	100.00	116.00	153.58	174.60	177.01	198.18
S&P Hotels, Resorts & Cruise Lines	100.00	125.18	161.67	200.56	208.31	223.95


^(a)	Includes ~~operating, cost~~Operating, Cost of ~~VOIs, consumer~~vacation ownership interests, Consumer financing interest, ~~marketing and reservation and general~~Marketing, General and administrative, and Restructuring expenses.


^(c)	Reflects the impact of the adoption of ~~the new~~ accounting standards issued during 2016 related to ~~the balance sheet classification of deferred taxes and~~ the presentation of debt issuance ~~costs during 2016. See Note 2 - Summary or Significant Accounting Polices for additional information regarding the adoption of this guidance.~~costs.


^(d)	~~The impact from acquisitions/dispositions has been~~For additional details on the Company’s operating statistics see the “Operating Statistics” section included ~~from their acquisition/disposition dates forward.~~in Item 7 of this Annual Report on Form 10-K.



	Net Revenues							EBITDA
	2016			2015			% Change	2016				2015				% Change
Hotel Group	$	1,309		$	1,297		0.9	$	391		^(b)	$	349		^(g)	12.0
Destination Network	1,571			1,538			2.1	356			^(c)	367			^(h)	(3.0)
Vacation Ownership	2,794			2,772			0.8	694			^(d)	687			⁽ⁱ⁾	1.0
Total Reportable Segments	5,674			5,607			1.2	1,441				1,403				2.7
Corporate and Other ^(a)	(75		)	(71		)	(5.6)	(110		)	^(e)	(137		)	^(j)	19.7
Total Company	$	5,599		$	5,536		1.1	$	1,331			$	1,266			5.1


Reconciliation of EBITDA to Net Income

								2016				2015
EBITDA								$	1,331			$	1,266
Depreciation and amortization								252				234
Interest expense								136				125
Early extinguishment of debt								11			^(f)	—
Interest income								(8		)		(9		)
Income before income taxes								940				916
Provision for income taxes								328				304
Net income								612				612
Net income attributable to noncontrolling interest								(1		)		—
Net income attributable to Wyndham shareholders								$	611			$	612


•	$184 millionincrease in Non-recourse vacation ownership debt due to $130 million increase in non-recourse term notes and $54 million increase in conduit borrowings;


^(a)	Represents debt that is securitized through bankruptcy-remote ~~SPEs,~~special purpose entities the creditors toof which have no recourse to us for principal and interest.


^(b)	~~Includes $300 million of senior unsecured notes due during March 2017 which we intend to refinance on a long-term basis and have the ability to do so with our revolving credit facility.~~


^(c)	Includes interest on both ~~securitized~~debt and ~~long-term~~non-recourse debt; estimated using the stated interest rates on our ~~long-term~~debt and ~~securitized~~non-recourse debt.


^(c)	Represents all operating leases including those with a lease of 12 months or less.


^(d)	Includes (i) ~~$209~~$1.03 billion for marketing related activities, (ii) $120 million relating to the development of vacation ownership properties, ~~of which $129 million is included within total liabilities on the Consolidated Balance Sheet, (ii) $152~~and (iii) $47 million for information technology ~~activities and (iii) $97 million for marketing related~~ activities.


^(f)	Represents liabilities which we assumed and are responsible for pursuant to ~~our Separation~~the Cendant separation and Spin-off of the hotel business (See Note ~~23 – Separation Adjustments and~~ 28—Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further ~~details)~~detail).


^(g)	Represents future consideration to be paid for the acquisition of ARN (See Note 5—Acquisitions to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further detail).


^(h)	Excludes other guarantees at our hotel group business as it is not reasonably estimable to determine the periods in which such commitments would be settled (See Other Commercial Commitments and Off-Balance Sheet Arrangements below).authorities.


~~ITEM 9.~~	~~CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE~~


~~ITEM 10.~~	~~DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE~~


~~ITEM 12.~~	~~SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS~~



~~Plan Category~~	~~Number of securities~~ ~~to be issued upon exercise of~~ ~~outstanding options,~~ ~~warrants and rights~~	~~Weighted-average exercise price~~ ~~of outstanding options, warrants~~ ~~and rights~~	~~Number of securities remaining~~ ~~available for future issuance under~~ ~~equity compensation plans (excluding securities reflected in the first column)~~
~~Equity compensation plans approved by security holders~~	~~2.8 million~~^(a)	~~$72.31~~^(b)	~~15.8 million~~^(c)
~~Equity compensation plans not approved by security holders~~	~~None~~	~~Not applicable~~	~~Not applicable~~


^(a)	Consists of shares issuable upon exercise of stock settled stock appreciation rights, restricted stock units and performance vested restricted stock units at the maximum achievement level under the 2006 Equity and Incentive Plan, as amended.


^(b)	Consists of weighted-average exercise price of outstanding stock settled stock appreciation rights and restricted stock units (excludes the weighted-average exercise price of the performance vested restricted stock units at the maximum achievement level).