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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

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

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

The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of ~~July 26, 2019~~April 24, 2020 was ~~85,911,860.~~84,987,241.

	June 30,		December 31,		March 31,		December 31,
	2019		2018		2020		2019
	(unaudited)				(unaudited)
ASSETS
Cash and cash equivalents	$	120	$	108	$	669	$	67
Restricted cash		67		72		90		85
Accounts receivable, net of allowance for doubtful accounts of $17 and $14		156		153
Accounts receivable, net of allowance for credit losses of $17 and $21						158		174
Timeshare financing receivables, net		1,125		1,120		1,122		1,156
Inventory		536		527		885		558
Property and equipment, net		673		559		473		778
Operating lease right-of-use assets, net		63		—		62		60
Investments in unconsolidated affiliates		43		38		47		44
Intangible assets, net		84		81		78		77
Other assets		122		95		120		80
TOTAL ASSETS (variable interest entities - $571 and $647)	$	2,989	$	2,753
TOTAL ASSETS (variable interest entities - $694 and $748)					$	3,704	$	3,079
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and other	$	312	$	324	$	268	$	298
Advanced deposits		108		101		117		115
Debt, net		937		604		1,266		828
Non-recourse debt, net		696		759		885		747
Operating lease liabilities		76		—		77		76
Deferred revenues		163		95		277		186
Deferred income tax liabilities		247		254		251		259
Total liabilities (variable interest entities - $562 and $640)		2,539		2,137
Total liabilities (variable interest entities - $694 and $750)						3,141		2,509
Commitments and contingencies - see Note 19
Equity:
Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of June 30, 2019 and December 31, 2018		—		—
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 85,910,022 issued and outstanding as of June 30, 2019 and 94,558,086 issued and outstanding as of December 31, 2018		1		1
Preferred stock, $0.01 par value; 300,000,000 authorized shares, NaN issued or outstanding as of March 31, 2020 and December 31, 2019						—		—
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 84,987,241 shares issued and outstanding as of March 31, 2020 and 85,535,501 shares issued and outstanding as of December 31, 2019						1		1
Additional paid-in capital		169		174		172		179
Accumulated retained earnings		280		441		390		390
Total equity		450		616		563		570
TOTAL LIABILITIES AND EQUITY	$	2,989	$	2,753	$	3,704	$	3,079

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Revenues
Sales of VOIs, net	$	120		$	250		$	245		$	328		$	56		$	125
Sales, marketing, brand and other fees		145			146			286			271			106			141
Financing		43			39			84			77			44			41
Resort and club management		43			37			85			76			44			42
Rental and ancillary services		60			53			119			104			52			59
Cost reimbursements		43			38			85			74			49			42
Total revenues		454			563			904			930			351			450
Expenses
Cost of VOI sales		32			61			68			80			14			36
Sales and marketing		186			193			356			354			157			170
Financing		12			12			25			23			13			13
Resort and club management		12			11			23			22			12			11
Rental and ancillary services		37			30			72			58			37			35
General and administrative		29			30			54			53			21			27
Depreciation and amortization		13			8			23			16			12			8
License fee expense		26			25			49			48			22			23
Cost reimbursements		43			38			85			74			49			42
Total operating expenses		390			408			755			728			337			365
Interest expense		(11	)		(8	)		(21	)		(15	)		(10	)		(10	)
Equity in earnings (losses) from unconsolidated affiliates		2			(2	)		3			(1	)
Other (loss) gain, net		(1	)		1			(2	)		—
Equity in earnings from unconsolidated affiliates														3			1
Other gain (loss), net														2			(1	)
Income before income taxes		54			146			129			186			9			75
Income tax expense		(15	)		(39	)		(35	)		(49	)		(1	)		(20	)
Net income	$	39		$	107		$	94		$	137		$	8		$	55
Earnings per share:
Basic	$	0.43		$	1.10		$	1.02		$	1.40		$	0.09		$	0.59
Diluted	$	0.43		$	1.10		$	1.01		$	1.39		$	0.09		$	0.58

	Six Months Ended June 30,						Three Months Ended March 31,
	2019			2018			2020			2019
Operating Activities
Net income	$	94		$	137		$	8		$	55
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		23			16			12			8
Amortization of deferred financing costs and other		5			3
Amortization of deferred financing costs, contract costs, and other								4			4
Provision for financing receivables losses		38			30			37			14
Other loss, net		2			—
Other (gain) loss, net								(2	)		1
Share-based compensation		12			8			(2	)		5
Deferred income tax benefit		(9	)		(6	)
Equity in (earnings) losses from unconsolidated affiliates		(3	)		1
Distributions received from unconsolidated affiliates		—			2
Deferred income tax (benefit) expense								(8	)		5
Equity in earnings from unconsolidated affiliates								(3	)		(1	)
Net changes in assets and liabilities:
Accounts receivable, net		(3	)		(26	)		16			7
Timeshare financing receivables, net		(42	)		(48	)		(3	)		(5	)
Inventory		(11	)		11			(10	)		(3	)
Purchases and development of real estate for future conversion to inventory		(80	)		(176	)		(5	)		(63	)
Other assets		(26	)		(58	)		(42	)		(33	)
Accounts payable, accrued expenses and other		(3	)		(42	)		(42	)		(27	)
Advanced deposits		7			8			2			5
Deferred revenues		68			4			91			41
Other		—			2			—			1
Net cash provided by (used in) operating activities		72			(134	)
Net cash provided by operating activities								53			14
Investing Activities
Capital expenditures for property and equipment		(17	)		(20	)		(3	)		(6	)
Software capitalization costs		(11	)		(9	)		(5	)		(4	)
Return of investment from unconsolidated affiliates		—			11
Investments in unconsolidated affiliates		(2	)		(5	)
Net cash used in investing activities		(30	)		(23	)		(8	)		(10	)
Financing Activities
Issuance of debt		410			160			495			195
Issuance of non-recourse debt		15			100			195			—
Repayment of debt		(105	)		(5	)		(57	)		(23	)
Repayment of non-recourse debt		(79	)		(80	)		(58	)		(40	)
Debt issuance costs		(2	)		(2	)
Repurchase and retirement of common stock		(271	)		(112	)		(10	)		(92	)
Payment of withholding taxes on vesting of restricted stock units		(3	)		(1	)		(2	)		(2	)
Proceeds from employee stock plan purchases		2			—
Capital contribution		—			3
Other financing activity		(2	)		—			(1	)		—
Net cash (used in) provided by financing activities		(35	)		63
Net increase (decrease) in cash, cash equivalents and restricted cash		7			(94	)
Net cash provided by financing activities								562			38
Net increase in cash, cash equivalents and restricted cash								607			42
Cash, cash equivalents and restricted cash, beginning of period		180			297			152			180
Cash, cash equivalents and restricted cash, end of period	$	187		$	203		$	759		$	222

Supplemental disclosure of non-cash operating activities:
Cumulative effect of adoption of new accounting standard	$	—		$	38
Non-cash transfers from Inventory to Property and Equipment⁽¹⁾							$	301		$	—
Supplemental disclosure of non-cash financing activities:
Issuance of other debt	$	23		$	—		$	—		$	23

																				Additional			Accumulated
															Common Stock					Paid-in			Retained			Total
															Shares			Amount		Capital			Earnings			Equity
Balance as of December 31, 2019																85		$	1	$	179		$	390		$	570
Net income																—			—		—			8			8
Activity related to share-based compensation																—			—		(5	)		—			(5	)
Repurchase and retirement of common stock																(1	)		—		(2	)		(8	)		(10	)
Balance as of March 31, 2020																84			1	$	172		$	390		$	563

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

						Additional			Accumulated
	Common Stock					Paid-in			Retained			Total
	Shares			Amount		Capital			Earnings			Equity
Balance as of December 31, 2017		99		$	1	$	162		$	355		$	518
Net income		—			—		—			30			30
Activity related to share-based compensation		—			—		(1	)		—			(1	)
Repurchase and retirement of common stock		(2	)		—		(3	)		(109	)		(112	)
Revenue recognition cumulative-effect adjustment		—			—		—			(38	)		(38	)
Capital contribution		—			—		3			—			3
Balance as of March 31, 2018		97			1		161			238			400
Net income		—			—		—			107			107
Activity related to share-based compensation		—			—		6			—			6
Other		—			—		3			1			4
Balance as of June 30, 2018		97		$	1	$	170		$	346		$	517

Hilton Grand Vacations Inc. (“Hilton Grand Vacations,” “we,” “us,” “our,” “HGV” or the “Company”) is a global timeshare company engaged in developing, marketing, selling and managing timeshare resorts primarily under the Hilton Grand Vacations brand. Our operations primarily consist of: selling vacation ownership intervals (“VOIs”) for us and third parties; financing and servicing loans provided to consumers for their timeshare purchases; operating resorts; and managing our points-based Hilton Grand Vacations Club exchange program ~~(the~~(collectively the “Club”). As of ~~June 30, 2019,~~March 31, 2020, we had 5759 properties, comprised of ~~9,177~~9,551 units, located in the United States (“U.S.”), Japan, the United Kingdom, Italy and ~~Europe.~~Barbados.

In connection with the completion of the spin-off in January 2017, we entered into agreements with Hilton Worldwide (“Hilton”) (who at the time was a related party) and other third parties, including licenses to use the Hilton Grand Vacations brand. The unaudited condensed consolidated financial statements reflect the effect of these agreements. For the three months ended June 30, 2019 and 2018, we incurred $36 million and $38 million, respectively, and for each of the six months ended June 30, 2019 and 2018, we incurred $92 million and $97 million, respectively, in costs relating to the agreements entered with Hilton. See ~~Key Agreements Related to the Spin-Off~~ ~~section in~~ ~~Part I - Item 1. Business~~ ~~of our Annual Report on Form 10-K for the year ended December 31, 2018 for further information.~~

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

The unaudited condensed consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Although we believe the disclosures made are adequate to prevent information presented from being misleading, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, ~~2018,~~2019, included in our Annual Report on Form 10-K filed with the SEC on ~~February 28, 2019.~~March 2, 2020.

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

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

We ~~lease sales centers, office space and equipment under operating leases. We determine if an arrangement is a lease at inception. Amounts related to operating leases~~capitalize certain costs associated with cloud computing arrangements (“CCAs”). These costs are included in ~~Operating lease right-of-use (“ROU”)~~Other assets ~~net~~ ~~and~~ ~~Operating lease liabilities~~ in our condensed consolidated balance ~~sheets. Operating lease ROU assets~~sheets and are ~~adjusted~~expensed in the same line as the hosting arrangement in our condensed consolidated statements of operations using the straight-line method over the assets’ estimated useful lives, which is generally three to five years. We review the CCAs for ~~lease incentives received.~~

~~ROU assets and operating lease liabilities are recognized based on~~impairment when circumstances indicate that their carrying amounts may not be recoverable. If the ~~present~~carrying value of ~~lease payments~~an asset group is not recoverable, we recognize an impairment loss for the excess of carrying value over the ~~lease term~~fair value in our condensed consolidated statements of operations.

We use derivative instruments as part of our overall strategy to manage our exposure to market risks primarily associated with fluctuations in interest rates and do not use derivatives for trading or speculative purposes. We record the derivative instrument at fair value either as an asset or liability. We assess the effectiveness of our hedging instruments quarterly and record changes in fair value in accumulated other comprehensive income (“AOCI”) for the effective portion of the ~~commencement date. Because most~~hedge and record the ineffectiveness of a hedge immediately in earnings in our ~~leases do not provide an explicit~~condensed consolidated statements of operations. We release the derivative’s gain or ~~implicit rate~~loss from AOCI to match the timing of ~~return, we use our incremental borrowing rate based~~the underlying hedged items’ effect on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar terms.earnings.

We have lease agreements with lease and non-lease components. Our operating leases may require minimum rent payments, contingent rent payments based on a percentage of revenue or income or rental payments adjusted periodically for inflation, or rent payments equal to the greater of a minimum rent or contingent rent. Our leases do not contain any residual value guarantees or material restrictive covenants. Leases with a lease term of 12 months or less are not recorded on the condensed consolidated balance sheets and lease expense is recognized on a straight-line basis over the lease term.

We monitor events or changes in circumstances that change the timing or amount of future lease payments which results in the remeasurement of a lease liability, with a corresponding adjustment to the ROU asset. ROU assets for operating and financing leases are periodically reviewed for impairment losses under ASC 360-10, ~~Property, Plant, and Equipment, to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize.~~

On January 1, ~~2019,~~2020, we adopted Accounting Standards Update (ASU) No. ~~2016-02,~~ ~~Leases~~ ~~(Topic 842)~~2016-13, (“ASU ~~2016-02”~~2016-13”) ~~as amended,~~, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), using the modified retrospective ~~approach permitted under~~approach. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis are measured using an expected-loss model, replacing the current incurred-loss model, and recorded through an allowance for credit losses. The adoption of ASU ~~No. 2018-11,~~2016-13 did not have a material impact on our condensed consolidated financial statements and related disclosures and no cumulative adjustment was recorded primarily as our timeshare financing receivables are recorded net of an allowance that is calculated in accordance with ASC 606, ~~Targeted Improvements,~~ Revenue from Contracts with Customers~~collectively~~.

On January 1, 2020, we adopted ASU 2018-15 (“ASU 2018-15”), Customer’s Accounting Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification ~~Topic 842 (“ASC 842”)~~. 350-40 to determine which implementation costs to defer and recognize as an asset. ASU 2018-15 generally aligns the guidance on recognizing implementation costs incurred in a cloud computing arrangement that is a service contract with that for implementation costs incurred to develop or obtain internal-use software, including hosting arrangements that include an internal-use software license. This ASU has been adopted using the retrospective approach. Accordingly,previously reported financial information has ~~not~~ been restated to reflect the application of the new standard to the comparative periods presented. ~~As permitted under the transition guidance in ASC 842, we~~The adoption of ASU 2018-15 did not have ~~made an accounting policy election to adopt the following package of practical expedients:~~

~~ROU assets represent our right to use an underlying asset for the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. ASC 842 had no~~a material impact on our condensed consolidated statements of operations or on our condensed consolidated statements of cash flows. Upon adoption, we recognized ROU assets of $68 million and operating lease liabilities of $80 million for our real estate and equipment operating leases on the condensed consolidated balance sheets.financial statements.

In ~~June 2016,~~December 2019, the FASB issued ASU ~~No. 2016-13,~~2019-12 (“ASU ~~2016-13”~~2019-12”), ~~Financial Instruments-Credit Losses~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ~~(Topic 326):~~ ~~Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses. Subsequent to~~ ASU ~~2016-13, the FASB has issued several related ASUs amending the original ASU. The updates are~~2019-12 is intended to ~~provide financial statement users with more decision-useful information about~~simplify various aspects related to accounting for income taxes by removing certain exceptions to the ~~expected credit losses on financial instruments~~general principles in Topic 740 and ~~other commitments~~which also clarifies and amends existing guidance to ~~extend credit held by a reporting entity at each reporting date.~~improve consistent application. The ~~update is~~provisions of this ASU are effective for ~~annual~~reporting periods ~~beginning~~ after December 15, ~~2019.~~2020. We are currently evaluating the effect ofthat this ASU ~~but we do not expect it to~~will have ~~a material impact~~ on our ~~unaudited~~condensed consolidated financial statements.

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

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

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
($ in millions)	2019		2018		2019		2018		2020		2019
Real Estate and Financing Segment
Sales of VOIs, net	$	120	$	250	$	245	$	328	$	56	$	125
Sales, marketing, brand and other fees		145		146		286		271		106		141
Interest income		36		34		72		68		38		36
Other financing revenue		7		5		12		9		6		5
Real estate and financing segment revenues	$	308	$	435	$	615	$	676	$	206	$	307

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
($ in millions)	2019		2018		2019		2018		2020		2019
Resort Operations and Club Management Segment
Club management	$	26	$	23	$	52	$	46	$	25	$	26
Resort management		17		14		33		30		19		16
Rental ⁽¹⁾		53		46		105		91		47		52
Ancillary services		7		7		14		13		5		7
Resort operations and club management segment revenues	$	103	$	90	$	204	$	180	$	96	$	101

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

					March 31,		December 31,
($ in millions)	June 30, 2019		December 31, 2018		2020		2019
Receivables	$	128	$	122	$	115	$	129
Contract asset		3		—
Contract assets						1		—

The following table presents the composition of our contract ~~liabilities for the six months ended June 30, 2019.~~liabilities.

					March 31,		December 31,
($ in millions)	June 30, 2019		December 31, 2018		2020		2019
Contract liabilities:
Advanced deposits	$	108	$	101	$	117	$	115
Deferred revenues⁽¹⁾		145		72
Club Bonus Point incentive liability⁽²⁾		61		56
Deferred Sales of VOIs of projects under construction						131		84
Club activation fees, annual dues and other						130		86
Club Bonus Point incentive liability⁽¹⁾						61		59

Revenue earned ~~during~~for the three ~~and six~~ months ended ~~June 30, 2019~~March 31, 2020 that was included in the contract liabilities balance at December 31, ~~2018~~2019 was approximately ~~$39 million and $78 million, respectively.~~$36 million.

Our accounts receivables that relate to our contracts with customers includes amounts associated with our contractual right to consideration for completed performance obligations related primarily to our fee-for-service arrangements and homeowners’ associations (“HOA”) management agreements and are settled when the related cash is received. Accounts receivable are recorded when the right to consideration becomes unconditional and is only contingent on the passage of time. Refer to Note 5:6: Timeshare Financing Receivables for information on balances and changes in balances during the period related to our timeshare financing receivables.

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

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

Transaction price allocated to remaining performance obligations represents contract revenue that has not yet been recognized. Our contracts with remaining performance obligations primarily include (i) sales of VOIs under construction, (ii) Club activation fees paid at closing of a VOI purchase, (iii) customers’ advanced deposits on prepaid vacation packages and (iv) Club Bonus Points that may be redeemed in the future. AsThe following table represents the deferred revenue, cost of ~~June 30, 2019, we deferred $34 million of revenue~~VOI sales and ~~$5 million of~~ direct selling costs from sales of VOIs related to projects under construction ~~that will be acquired under a just-in-time arrangement once construction is complete.~~ as of March 31, 2020:

We expect to recognize the revenue, costs of VOI sales and direct selling costs ~~during~~upon completion of the ~~second quarter of 2020. Upon acquisition, we expect to recognize $11 million~~projects in ~~costs of VOI sales related to these sales. As of December 31, 2018, we had no remaining performance obligations on sales of VOIs under construction.~~2021.

The following table includes the remaining transaction price related to Advanced deposits, Club activation fees and Club Bonus Points as of ~~June 30, 2019:~~March 31, 2020:

($ in millions)

Remaining

Transaction Price

Recognition Period

Recognition Method

Remaining

Transaction Price

Recognition Period

Recognition Method

Advanced deposits

108

18 months

Upon customer stays

117

18 months

Upon customer stays

Club activation fees

7 years

Straight-line basis over average inventory holding

period

7 years

Straight-line basis over average inventory holding

period

Club Bonus Points

24 months

Upon redemption

24 months

Upon redemption

	June 30,		December 31,		March 31,		December 31,
($ in millions)	2019		2018		2020		2019
Escrow deposits on VOI sales	$	41	$	45	$	59	$	59
Reserves related to non-recourse debt⁽¹⁾		26		27		31		26
	$	67	$	72	$	90	$	85

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

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

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

	June 30, 2019									March 31, 2020
($ in millions)	Securitized and Pledged			Unsecuritized⁽¹⁾			Total			Securitized and Pledged			Unsecuritized⁽¹⁾			Total
Timeshare financing receivables	$	579		$	720		$	1,299		$	703		$	631		$	1,334
Less: allowance for financing receivables losses		(35	)		(139	)		(174	)		(48	)		(164	)		(212	)
	$	544		$	581		$	1,125		$	655		$	467		$	1,122

	December 31, 2018									December 31, 2019
($ in millions)	Securitized and Pledged			Unsecuritized⁽¹⁾			Total			Securitized and Pledged			Unsecuritized⁽¹⁾			Total
Timeshare financing receivables	$	660		$	632		$	1,292		$	758		$	582		$	1,340
Less: allowance for financing receivables losses		(43	)		(129	)		(172	)		(54	)		(130	)		(184	)
	$	617		$	503		$	1,120		$	704		$	452		$	1,156

As of ~~June 30, 2019 and December~~March 31, ~~2018, we had $279 million and $190 million, respectively,~~2020, the carrying value of ~~gross~~our timeshare financing receivables securing the outstanding debt balance of our Timeshare Facility was $191 million. As of December 31, 2019, we had 0 timeshare receivables pledged to the Timeshare Facility.We record an estimate of variable consideration for estimated defaults as a reduction of revenue from VOI sales at the time revenue is recognized on a VOI sale. We record the difference between the timeshare financing receivable and the variable consideration included in the transaction price for the sale of the related VOI as an allowance for financing receivables and record the receivable net of the allowance. During the three months ended March 31, 2020, we recorded an adjustment to our estimate of variable consideration of $37 million, which includes a $23 million revenue reduction related to changes in estimates primarily driven by economic factors surrounding the COVID-19 pandemic.

Our timeshare financing receivables as of ~~June 30, 2019~~March 31, 2020 mature as follows:

($ in millions)	Securitized and Pledged			Unsecuritized			Total			Securitized and Pledged			Unsecuritized			Total
Year
2019 (remaining)	$	40		$	39		$	79
2020		81			58			139
2020 (remaining)										$	69		$	43		$	112
2021		80			64			144			92			50			142
2022		77			70			147			93			54			147
2023		75			75			150			93			59			152
2024											92			63			155
Thereafter		226			414			640			264			362			626
		579			720			1,299			703			631			1,334
Less: allowance for financing receivables losses		(35	)		(139	)		(174	)		(48	)		(164	)		(212	)
	$	544		$	581		$	1,125		$	655		$	467		$	1,122

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

We recognize interest income on our timeshare financing receivables as earned. As of March 31,2020, and December 31, 2019 we had $9 million of interest receivable outstanding included in our condensed consolidated balance sheets. The interest rate charged on the notes correlates to the risk profile of the customer at the time of purchase and the percentage of the purchase that is financed, among other factors. As of ~~June 30, 2019,~~March 31, 2020, our timeshare financing receivables had interest rates ranging from ~~5.25~~3.90 percent to 20.50 percent, a weighted-average interest rate of ~~12.36~~12.52 percent, a weighted-average remaining term of ~~7.7~~7.9 years and maturities through ~~2031.~~2035.

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

	June 30,		December 31,		March 31,		December 31,
($ in millions)	2019		2018		2020		2019
FICO score
700+	$	853	$	843	$	812	$	818
600-699		234		237		291		292
<600		27		27		39		39
No score⁽¹⁾		185		185		192		191
	$	1,299	$	1,292	$	1,334	$	1,340

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

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

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

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, we had ceased accruing interest on timeshare financing receivables with an aggregate principal balance of ~~$70~~$84 million and ~~$69~~$74 million, respectively. The following tables detail an aged analysis of our gross timeshare ~~financing~~ receivables balance:

	June 30, 2019						March 31, 2020
($ in millions)	Securitized and Pledged		Unsecuritized		Total		Securitized and Pledged		Unsecuritized		Total
Current	$	566	$	644	$	1,210	$	683	$	540	$	1,223
31 - 90 days past due		8		11		19		13		14		27
91 - 120 days past due		2		4		6		4		4		8
121 days and greater past due		3		61		64		3		73		76
	$	579	$	720	$	1,299	$	703	$	631	$	1,334

	December 31, 2018						December 31, 2019
($ in millions)	Securitized and Pledged		Unsecuritized		Total		Securitized and Pledged		Unsecuritized		Total
Current	$	648	$	556	$	1,204	$	743	$	502	$	1,245
31 - 90 days past due		8		11		19		9		12		21
91 - 120 days past due		3		3		6		3		4		7
121 days and greater past due		1		62		63		3		64		67
	$	660	$	632	$	1,292	$	758	$	582	$	1,340

	June 30, 2019									March 31, 2020
($ in millions)	Securitized and Pledged			Unsecuritized			Total			Securitized and Pledged			Unsecuritized			Total
Balance as of December 31, 2018	$	43		$	129		$	172
Balance as of December 31, 2019										$	54		$	130		$	184
Write-offs		—			(36	)		(36	)		—			(9	)		(9	)
Provision for financing receivables losses⁽¹⁾		(8	)		46			38			(6	)		43			37
Balance as of June 30, 2019	$	35		$	139		$	174
Balance as of March 31, 2020										$	48		$	164		$	212

	June 30, 2018									March 31, 2019
($ in millions)	Securitized and Pledged			Unsecuritized			Total			Securitized and Pledged			Unsecuritized			Total
Balance as of December 31, 2017	$	27		$	114		$	141
Balance as of December 31, 2018										$	43		$	129		$	172
Write-offs		—			(14	)		(14	)		—			(17	)		(17	)
Provision for financing receivables losses⁽¹⁾		(7	)		37			30			(4	)		18			14
Balance as of June 30, 2018	$	20		$	137		$	157
Balance as of March 31, 2019										$	39		$	130		$	169

	June 30,		December 31,		March 31,		December 31,
($ in millions)	2019		2018		2020		2019
Completed unsold VOIs	$	249	$	243	$	241	$	241
Construction in process		11		9		386		59
Land, infrastructure and other		276		275		258		258
	$	536	$	527	$	885	$	558

~~We benefited~~During the three months ended March 31, 2020, we recorded non-cash operating activity transfers from ~~$5 million in~~Property and equipment to Inventory. See Note 8: Property and Equipment.

Shown below are (i) costs of sales true-ups relating to VOI products ~~for~~and the ~~six months ended June 30, 2019, which resulted in a $5 million increase~~related impacts to the carrying value of inventory ~~as of June 30, 2019.~~ We benefited from $10 million in costs of sales true-ups relating to VOI products for the year ended December 31, 2018, which resulted in a $10 million increase to the carrying value of inventory as of December 31, 2018. Shown below areand (ii) expenses incurred, recorded in Cost of VOI sales,, related to granting credit to customers for their existing ownership when upgrading into ~~fee-for-service~~fee-for service projects.

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
($ in millions)	2019		2018		2019		2018		2020		2019
Cost of sales true-up⁽¹⁾									$	4	$	4
Cost of VOI sales related to fee-for-service upgrades	$	7	$	9	$	16	$	15		5		9

	June 30,			December 31,			March 31,			December 31,
($ in millions)	2019			2018			2020			2019
Land	$	335		$	268		$	104		$	154
Building and leasehold improvements		300			295			245			286
Furniture and equipment		68			54			66			65
Construction in progress		66			25			172			383
		769			642			587			888
Accumulated depreciation		(96	)		(83	)		(114	)		(110	)
	$	673		$	559		$	473		$	778

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

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, we consolidated ~~four~~4 variable interest entities (“VIEs”) that issued non-recourse debt backed by pledged assets consisting primarily of a pool of timeshare financing receivables which is without recourse to us. We are the primary beneficiaries of these VIEs as we have the power to direct the activities that most significantly affect their economic performance. We are also the servicer of these timeshare financing receivables and we are required to replace or repurchase timeshare financing receivables that are in default at their outstanding principal amounts. Additionally, we have the obligation to absorb their losses and the right to receive benefits that could be significant to them. Only the assets of our VIEs are available to settle the obligations of the respective entities.

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

	June 30,		December 31,		March 31,		December 31,
($ in millions)	2019		2018		2020		2019
Restricted cash	$	20	$	23	$	26	$	26
Timeshare financing receivables, net		544		617		655		704
Non-recourse debt⁽¹⁾		561		639		690		747

During the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ we did ~~not~~0t provide any financial or other support to any VIEs that we were not previously contractually required to provide, nor do we intend to provide such support in the future.

As of ~~June 30, 2019,~~March 31, 2020, we have 25 percent and 50 percent ownership interests in BRE Ace LLC and 1776 ~~Holdings~~Holding LLC, respectively, that are deemed as VIEs. We do not consolidate BRE Ace LLC and 1776 ~~Holdings~~Holding LLC because we are not the primary beneficiary. Our investment interests in and equity earned from both VIEs are included in the consolidated balance sheets as Investments in unconsolidated affiliates and in the consolidated statements of operations as Equity in earnings ~~(losses)~~ from unconsolidated affiliates, respectively.

We held investments in our ~~two~~2 unconsolidated affiliates with aggregated debt balances of ~~$478~~ $477million and ~~$490~~$479 million as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. The debt is secured by their assets and is without recourse to us. Our maximum exposure to loss as a result of our investment interests in the two unconsolidated affiliates is primarily limited to (i) the carrying amount of the investments which totals ~~$43~~$47 million and ~~$38~~$44 million as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively and (ii) receivables for commission and other fees earned under a fee-for-service ~~arrangement.~~arrangements. See Note 17: Related Party Transactions for additional information.

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

	June 30,			December 31,			March 31,			December 31,
($ in millions)	2019			2018			2020			2019
Debt⁽¹⁾
Senior secured credit facilities:
Term loan with an average rate of 3.898%, due 2023	$	192		$	197
Revolver with an average rate of 3.898%, due 2023		425			115
Term loan with a rate of 2.709%, due 2023							$	185		$	187
Revolver with a weighted average rate of 2.597%, due 2023								760			320
Senior notes with a rate of 6.125%, due 2024		300			300			300			300
Other debt		27			—			27			27
		944			612			1,272			834
Less: unamortized deferred financing costs and discount⁽²⁾⁽³⁾		(7	)		(8	)		(6	)		(6	)
	$	937		$	604		$	1,266		$	828

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, we borrowed ~~$410~~$495 million and repaid ~~$105~~ $57million (including recurring payments) under the senior secured credit facilities with an interest rate based on one month LIBOR plus ~~1.5~~ 1.75percent.

During the first quarter of 2020, we entered into a pay-fixed/receive-variable interest rate swap agreement on our senior secured credit facility with a notional amount of $62 million. The one-month LIBOR was effectively modified to a fixed rate of 0.62% through November 2023. For the three months ended March 31, 2020, we recorded less than $1 million in accumulated other comprehensive income related to the hedge.

As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, we had $1 million of outstanding ~~letter~~letters of credit under the revolving credit facility. We were in compliance with all applicable financial covenants as of ~~June 30, 2019.~~March 31, 2020.

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

	June 30,			December 31,			March 31,			December 31,
($ in millions)	2019			2018			2020			2019
Non-recourse debt⁽¹⁾
Timeshare Facility with an average rate of 3.337%, due 2021	$	135		$	120
Securitized Debt with a rate of 2.280%, due 2026		25			33
Timeshare Facility with an average rate of 1.861%, due 2022							$	195		$	—
Securitized Debt with an average rate of 1.810%, due 2026		59			74			40			46
Securitized Debt with an average rate of 2.711%, due 2028		176			206			136			149
Securitized Debt with an average rate of 3.602%, due 2032		307			333			250			275
Securitized Debt with an average rate of 2.431%, due 2033								271			285
		702			766			892			755
Less: unamortized deferred financing costs⁽²⁾		(6	)		(7	)		(7	)		(8	)
	$	696		$	759		$	885		$	747

The Timeshare Facility is a non-recourse obligation with a borrowing capacity of $450 million and is payable solely from the pool of timeshare financing receivables pledged as collateral and related assets.In ~~April 2019,~~January 2020, we amended the Timeshare Facility, ~~excluding the end of the commitment period, from March 2020 to April 2021.~~temporarily changing certain covenant requirements. All other terms and borrowing capacity remained the ~~same.~~same in both amendments.

We are required to deposit payments received from customers on the timeshare financing receivables securing the Timeshare Facility and Securitized Debt into depository accounts maintained by third parties. On a monthly basis, the depository accounts are utilized to make required principal, interest and other payments due under the respective loan agreements. The balances in the depository accounts were ~~$26~~$31 million and ~~$27~~$26 million as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively, and were included in Restricted cash in our condensed consolidated balance sheets.

The contractual maturities of our debt and non-recourse debt as of ~~June 30, 2019~~March 31, 2020 were as follows:

($ in millions)	Debt		Non-recourse Debt		Total		Debt		Non-recourse Debt		Total
Year
2019 (remaining)	$	6	$	110	$	116
2020		12		167		179
2020 (remaining)							$	9	$	174	$	183
2021		11		88		99		11		161		172
2022		10		200		210		11		307		318
2023		582		76		658		918		112		1,030
2024								300		43		343
Thereafter		323		61		384		23		95		118
	$	944	$	702	$	1,646	$	1,272	$	892	$	2,164

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

	June 30, 2019						March 31, 2020
			Hierarchy Level						Hierarchy Level
($ in millions)	Carrying Amount		Level 1		Level 3		Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables, net⁽¹⁾	$	1,125	$	—	$	1,387	$	1,122	$	—	$	1,377
Liabilities:
Debt, net⁽²⁾		937		320		649		1,266		270		962
Non-recourse debt, net⁽²⁾		696		—		707		885		—		845

	December 31, 2018						December 31, 2019
			Hierarchy Level						Hierarchy Level
($ in millions)	Carrying Amount		Level 1		Level 3		Carrying Amount		Level 1		Level 3
Assets:
Timeshare financing receivables, net⁽¹⁾	$	1,120	$	—	$	1,339	$	1,156	$	—	$	1,446
Liabilities:
Debt, net⁽²⁾		604		302		309		828		326		544
Non-recourse debt, net⁽²⁾		759		—		753		747		—		749

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

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

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

We do ~~not~~0t have any assets or liabilities measured at fair value on a recurring or non-recurring basis as of ~~June 30, 2019.~~March 31, 2020.

We lease sales centers, office space and equipment under operating leases. Our leases expire at various dates from ~~2019~~2020 through 2030, with varying renewal and termination options. Our lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

We recognize rent expense on leases with both contingent and non-contingent lease payment terms. Rent ~~expense for~~associated with non-contingent lease payments isare recognized on a straight-line basis over the lease term. ~~Rental~~Rent expense for all operating leases ~~was $4 million and $10 million~~ for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 was $2 million and $6 million, respectively. This amount includes immaterial short-term leases and variable lease costs. ~~Rent expense for all~~

Supplemental cash flow information related to operating leases ~~for the year ended December 31, 2018~~ was as follows:

Supplemental balance sheet information related to operating leases ~~for the six months ending June 30, 2019:~~was as follows:

Future minimum lease payments under noncancelable operating leases, due in each of the next five years and thereafter as of ~~June 30, 2019,~~March 31, 2020, are as follows:

~~Future minimum lease payments under noncancelable operating leases, due in each of the next five years and thereafter as of December 31, 2018, are as follows:~~

($ in millions)	Operating Leases		Operating Leases
Year
2019	$	16
2020		15
2020 (remaining)			$	14
2021		14		18
2022		10		13
2023		10		12
2024				11
Thereafter		29		22
Total future minimum lease payments	$	94	$	90
Less: imputed interest				(13	)
Present value of lease liabilities			$	77

At the end of each quarter, we estimate the effective tax rate expected to be applied for the full year. The effective tax rate is determined by the level and composition of pre-tax ordinary income or loss, which is subject to federal, foreign and state and local income taxes. The effective tax rate for the ~~six~~three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ was approximately 11 percent and 27 percent, ~~and 26 percent, respectively, which increased~~respectively. The decrease in the effective tax rate is primarily due to ~~a reduction in~~ the tax benefit ~~related~~on our worldwide estimated ordinary loss being reduced by the incremental tax expense from the estimated ordinary income in our foreign jurisdictions, and the impact of estimated permanent differences between financial reporting and taxable income.

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

be recognized either in the interim period in which the legislation is enacted or ~~vested during~~reflected in the ~~six months ended June 30, 2019.~~computation of the annual effective tax rate, depending on the nature of the change. As of March 31, 2020, we evaluated the income tax provisions of the CARES Act and have determined there to be no effect on either the March 31, 2020 tax rate or the computation of the estimated effective tax rate for the year. We will continue to evaluate the income tax provisions of the CARES Act and monitor the developments in the jurisdictions where we have significant operations for tax law changes that could have income tax accounting and disclosure implications.

We issue service-based restricted stock units (“Service RSUs”), service and performance-based restricted stock units (“Performance RSUs”) and nonqualified stock options (“Options”) to certain employees and directors. WeFor the three months ended March, 31, 2020, we recognized a credit to share-based compensation expense of $2 million due to the reversal of $8 million of expense recognized in prior years related to our Performance RSUs which are not expected to achieve certain performance targets. See Performance Shares below for additional information. For the three months ended March 31, 2019, we recognized share-based compensation expense of ~~$7 million and~~ $5 ~~million during the three months ended June 30, 2019 and 2018, respectively, and $12 million and $8 million for the six months ended June 30, 2019 and 2018, respectively.~~million. As of ~~June 30, 2019,~~March 31, 2020, unrecognized compensation costs for unvested awards were approximately ~~$34~~$32 million, which is expected to be recognized over a weighted average period of 1.9 years. As of ~~June 30, 2019,~~March 31, 2020, there were ~~6,386,657~~5,192,801 shares of common stock available for future ~~issuance.~~issuance under this plan.

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, we issued ~~500,925~~609,311 Service RSUs with a ~~weighted-average~~ grant date fair value of ~~$33.07,~~$25.80, which generally vest in equal annual installments over three years from the date of grant.

During the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020, we issued ~~544,209~~566,401 Options with ~~a weighted-average~~an exercise price of ~~$33.32,~~$25.80, which vest over three years from the date of the grant.

The weighted-average grant date fair value of these options was ~~$12.29,~~$9.14, which was determined using the Black-Scholes-Merton option-pricing model with the following assumptions:

As of ~~June 30, 2019,~~March 31, 2020, we had ~~648,617~~1,122,415 Options outstanding that were exercisable.

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, we issued ~~133,660~~172,620 Performance RSUs with a ~~weighted-average~~ grant date fair value of ~~$33.32.~~$25.80. The Performance RSUs are settled at the end of a three-year performance period, with 70 percent of the Performance RSUs subject to achievement based on the Company’s adjusted earnings before interest expense, taxes and depreciation and amortization further adjusted for net ~~impacts~~deferral and ~~recognitions~~recognition of revenues and related direct expenses related to sales of VOIs of projects under construction. The remaining 30 percent of the Performance RSUs are subject to the achievement of certain contract sales targets. WeAs of March 31, 2020, we determined that the performance conditions for ~~these~~the 2018, 2019, and 2020 Performance RSU awards are ~~probable~~improbable of achievement due to the significantly negative impact of the COVID-19 pandemic on the global economy, demand for travel and leisure, and our business, including the temporary closures of substantially all of our properties and suspension of substantially all of our sales and other operations, as described in Note 21: COVID-19 and Subsequent Events. As a result, we reversed $8 million of ~~June 30,~~previously recognized share-based compensation expense related to our 2018 and 2019 Performance RSUs and ceased accruing expense related to Performance RSUs granted in 2018, 2019, and 2020, during the three months ended March 31, 2020.

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

The following table presents the calculation of our basic and diluted earnings per share (“EPS”). The weighted- average shares outstanding used to compute basic EPS and diluted EPS for the three months ended ~~June 30, 2019 is 89,849,803~~March 31, 2020 was 85,519,151 and ~~90,271,976,~~86,044,525, respectively, and ~~for the six months ended June 30, 2019 is 91,959,041 and 92,421,752, respectively. The weighted-average shares outstanding used to compute basic EPS and diluted EPS~~ for the three months ended ~~June 30, 2018~~March 31, 2019 was ~~96,774,130~~94,092,147 and ~~97,463,820, respectively, and six months ended June 30, 2018 was 97,692,558 and 98,474,971,~~94,597,630, respectively.

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
($ and shares outstanding in millions, except per share amounts)	2019		2018		2019		2018		2020		2019
Basic EPS:
Numerator:
Net Income⁽¹⁾	$	39	$	107	$	94	$	137	$	8	$	55
Denominator:
Weighted average shares outstanding		90		97		92		98		86		94
Basic EPS	$	0.43	$	1.10	$	1.02	$	1.40	$	0.09	$	0.59
Diluted EPS:
Numerator:
Net Income⁽¹⁾	$	39	$	107	$	94	$	137	$	8	$	55
Denominator:
Weighted average shares outstanding		90		97		92		98		86		95
Diluted EPS	$	0.43	$	1.10	$	1.01	$	1.39	$	0.09	$	0.58

The dilutive effect of outstanding share-based compensation awards is reflected in diluted earnings per common share by application of the treasury stock method using average market prices during the period.

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019, we excluded ~~1,433,833~~1,754,656 and ~~1,168,159, respectively, and for the three and six months ended June 30, 2018, we excluded 533,609 and 341,246~~948,248 share-based compensation awards, respectively, because their effect would have been anti-dilutive under the treasury stock method.

~~In July 2017, we acquired~~We hold a 25 percent ownership interest in BRE Ace LLC, a VIE, which owns a timeshare resort property and related operations, commonly known as “Elara, by Hilton Grand Vacations.” ~~During the three and six months ended June 30, 2019, we recorded $2 million and $3 million, respectively, of~~

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

We record Equity in earnings (losses) from our unconsolidated affiliates in our condensed consolidated statements of operations. ~~During the three and six months ended June 30, 2018, we recorded $2 million and $1 million, respectively, of~~See Note 10: ~~Equity~~Investments in ~~losses from unconsolidated affiliates~~Unconsolidated Affiliates ~~in our condensed consolidated statements of operations.~~for additional information. Additionally, we earn commissions and other fees related to a fee-for-service ~~agreement~~agreements with the ~~investee~~investees to sell VOIs at Elara, by Hilton Grand ~~Vacations.~~Vacations and Liberty Place Charleston, by Hilton Club. These amounts are summarized in the following table and are included in our condensed consolidated statements of operations as of the date they became a related ~~party.~~parties.

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
($ in millions)	2019		2018		2019		2018		2020		2019
Commission and other fees	$	32	$	32	$	68	$	64
Equity in earnings from unconsolidated affiliates									$	3	$	1
Commissions and other fees										23		36

We also have ~~$27~~$23 million and $25 million of outstanding receivables related to the fee-for-service ~~agreement~~agreements as of ~~June 30, 2019.~~

In March 2018, we entered into an agreement with SCG 1776, LLC to form 1776 Holding, LLC. In conjunction with this agreement, we contributed $5 million in cash for a 50 percent ownership interest in 1776 Holding, LLC. In May31, 2020 and December 31, 2019, the agreement was amended to assign the interest of SCG 1776, LLC in 1776 Holding, LLC to 1776 Investment Group, LLC. In May 2019, we also contributed an additional $2 million in cash to 1776 Holding, LLC. During each of the three and six months ended June 30, 2019 and 2018, we recorded less than $1 million, respectively, of ~~Equity in earnings (losses) from unconsolidated affiliates~~ ~~included in our condensed consolidated statements of operations. See Note 9:~~ ~~Investments in Unconsolidated Affiliates~~ ~~for additional information.~~respectively.

On March 13, 2018, HNA entered into an underwriting agreement with several underwriters to sell 22,250,000 shares of our common stock. In connection with the underwriting offer, we elected to purchase 2,500,000 shares at a price of approximately $44.75 per share. The transactions were completed on March 19, 2018 and HNA ceased to be a related party.

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

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

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

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
($ in millions)	2019			2018			2019			2018			2020			2019
Revenues:
Real estate sales and financing	$	308		$	435		$	615		$	676		$	206		$	307
Resort operations and club management⁽¹⁾⁽²⁾		114			98			224			196			104			110
Total segment revenues		422			533			839			872			310			417
Cost reimbursements		43			38			85			74			49			42
Intersegment eliminations⁽¹⁾⁽²⁾		(11	)		(8	)		(20	)		(16	)		(8	)		(9	)
Total revenues	$	454		$	563		$	904		$	930		$	351		$	450

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

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
($ in millions)	2019			2018			2019			2018			2020			2019
Adjusted EBITDA:
Real estate sales and financing⁽¹⁾	$	69		$	163		$	149		$	207		$	15		$	80
Resort operations and club management⁽¹⁾		66			58			131			117			55			65
Segment Adjusted EBITDA		135			221			280			324			70			145
General and administrative		(29	)		(30	)		(54	)		(53	)		(21	)		(27	)
Depreciation and amortization		(13	)		(8	)		(23	)		(16	)		(12	)		(8	)
License fee expense		(26	)		(25	)		(49	)		(48	)		(22	)		(23	)
Other (loss) gain, net		(1	)		1			(2	)		—
Other gain (loss), net														2			(1	)
Interest expense		(11	)		(8	)		(21	)		(15	)		(10	)		(10	)
Income tax expense		(15	)		(39	)		(35	)		(49	)		(1	)		(20	)
Equity in earnings (losses) from unconsolidated affiliates		2			(2	)		3			(1	)
Equity in earnings from unconsolidated affiliates														3			1
Other adjustment items(2)		(3	)		(3	)		(5	)		(5	)		(1	)		(2	)
Net income	$	39		$	107		$	94		$	137		$	8		$	55

We have entered into certain arrangements with developers ~~to commit~~whereby we have committed to purchase vacation ownership units or other real estate at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of ~~June 30, 2019,~~March 31, 2020, we were committed to purchase approximately ~~$511~~$473 million of inventory and land over a period of ~~12 years.~~11 years and $26 million of other commitments under the normal course of business. Additionally, we have committed to develop additional vacation ownership units at an existing resort in Japan. The actual amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. During the ~~six~~three months ended ~~June 30,~~March 31, 2020, we did 0t make any purchases under our commitments. During the three months ended March 31, 2019, ~~and 2018,~~ we purchased ~~$28~~$9 million ~~and $4 million, respectively, of VOI inventory~~ as required under our commitments. As of ~~June 30, 2019,~~March 31, 2020, our remaining obligation pursuant to these arrangements were expected to be incurred as follows:

We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has evaluated these legal matters and we believe that possible losses derived from an unfavorable outcome that is reasonably possible or remote is not reasonably estimable. While the actual results of claims and litigation cannot be predicted with certainty, we expect that the resolution of all pending or threatened claims and litigation as of ~~June 30, 2019,~~March 31, 2020, will ~~not~~0t materially affect our unaudited condensed consolidated financial statements.

The following schedules present the unaudited condensed consolidating financial information as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 and for the three ~~and six~~ months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~ for the Parent, Subsidiary Issuers, Guarantors and Non-Guarantors.

	June 30, 2019													March 31, 2020
($ in millions)	Parent		Issuers		Guarantors		Non- Guarantors		Eliminations			Total		Parent		Issuers		Guarantors		Non- Guarantors		Eliminations			Total
ASSETS
Cash and cash equivalents	$	7	$	—	$	93	$	20	$	—		$	120	$	4	$	—	$	617	$	48	$	—		$	669
Restricted cash		—		—		41		26		—			67		—		—		59		31		—			90
Accounts receivable, net		—		—		156		20		(20	)		156		—		—		168		34		(44	)		158
Timeshare financing receivables, net		—		—		332		793		—			1,125		—		—		276		846		—			1,122
Inventory		—		—		496		40		—			536		—		—		803		82		—			885
Property and equipment, net		—		—		666		7		—			673		—		—		462		11		—			473
Operating lease right-of-use assets, net						63		—		—			63		—		—		60		2		—			62
Investments in unconsolidated affiliates		—		—		43		—		—			43		—		—		47		—		—			47
Intangible assets, net		—		—		84		—		—			84		—		—		78		—		—			78
Other assets		—		6		67		49		—			122		—		5		103		12		—			120
Investments in subsidiaries		443		1,347		243		—		(2,033	)		—		559		1,793		146		—		(2,498	)		—
TOTAL ASSETS	$	450	$	1,353	$	2,284	$	955	$	(2,053	)	$	2,989	$	563	$	1,798	$	2,819	$	1,066	$	(2,542	)	$	3,704
LIABILITIES AND EQUITY
Accounts payable, accrued expenses and other	$	—	$	—	$	317	$	15	$	(20	)	$	312	$	—	$	—	$	278	$	34	$	(44	)	$	268
Advanced deposits		—		—		108		—		—			108		—		—		117		—		—			117
Debt, net		—		910		27		—		—			937		—		1,239		27		—		—			1,266
Non-recourse debt, net		—		—		—		696		—			696		—		—		—		885		—			885
Operating lease liabilities		—		—		76		—		—			76		—		—		76		1		—			77
Deferred revenues		—		—		163		—		—			163		—		—		277		—		—			277
Deferred income tax liabilities		—		—		246		1		—			247		—		—		251		—		—			251
Total equity		450		443		1,347		243		(2,033	)		450		563		559		1,793		146		(2,498	)		563
TOTAL LIABILITIES AND EQUITY	$	450	$	1,353	$	2,284	$	955	$	(2,053	)	$	2,989	$	563	$	1,798	$	2,819	$	1,066	$	(2,542	)	$	3,704

	December 31, 2018													December 31, 2019
($ in millions)	Parent		Issuers		Guarantors		Non- Guarantors		Eliminations			Total		Parent		Issuers		Guarantors		Non- Guarantors		Eliminations			Total
ASSETS
Cash and cash equivalents	$	4	$	—	$	89	$	15	$	—		$	108	$	2	$	—	$	33	$	32	$	—		$	67
Restricted cash		—		—		45		27		—			72		—		—		59		26		—			85
Accounts receivable, net		—		—		157		17		(21	)		153		—		—		192		52		(70	)		174
Timeshare financing receivables, net		—		—		209		911		—			1,120		—		—		449		707		—			1,156
Inventory		—		—		502		25		—			527		—		—		524		34		—			558
Property and equipment, net		—		—		553		6		—			559		—		—		718		60		—			778
Operating lease right-of-use assets, net															—		—		58		2		—			60
Investments in unconsolidated affiliate		—		—		38		—		—			38		—		—		44		—		—			44
Intangible assets, net		—		—		81		—		—			81		—		—		77		—		—			77
Other assets		—		6		41		48		—			95		—		5		64		11		—			80
Investments in subsidiaries		612		1,210		277		—		(2,099	)		—		568		1,364		136		—		(2,068	)		—
TOTAL ASSETS	$	616	$	1,216	$	1,992	$	1,049	$	(2,120	)	$	2,753	$	570	$	1,369	$	2,354	$	924	$	(2,138	)	$	3,079
LIABILITIES AND EQUITY
Accounts payable, accrued expenses and other	$	—	$	—	$	332	$	13	$	(21	)	$	324	$	—	$	—	$	329	$	39	$	(70	)	$	298
Advanced deposits		—		—		101		—		—			101		—		—		115		—		—			115
Debt, net		—		604		—		—		—			604		—		801		27		—		—			828
Non-recourse debt, net		—		—		—		759		—			759		—		—		—		747		—			747
Operating lease liabilities															—		—		74		2		—			76
Deferred revenues		—		—		95		—		—			95		—		—		186		—		—			186
Deferred income tax liabilities		—		—		254		—		—			254		—		—		259		—		—			259
Total equity		616		612		1,210		277		(2,099	)		616		570		568		1,364		136		(2,068	)		570
TOTAL LIABILITIES AND EQUITY	$	616	$	1,216	$	1,992	$	1,049	$	(2,120	)	$	2,753	$	570	$	1,369	$	2,354	$	924	$	(2,138	)	$	3,079

	For the Three Months Ended June 30, 2019																		For the Three Months Ended March 31, 2020
($ in millions)	Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total			Parent			Issuers			Guarantors			Non- Guarantors		Eliminations			Total
Revenues
Sales of VOIs, net	$	—		$	—		$	103		$	17		$	—		$	120		$	—		$	—		$	32		$	24	$	—		$	56
Sales, marketing, license and other fees		—			—			154			3			(12	)		145
Sales, marketing, brand and other fees																				—			—			120			3		(17	)		106
Financing		—			—			20			25			(2	)		43			—			—			20			26		(2	)		44
Resort and club management		—			—			43			—			—			43			—			—			44			—		—			44
Rental and ancillary services		—			—			60			—			—			60			—			—			51			1		—			52
Cost reimbursements		—			—			42			1			—			43			—			—			48			1		—			49
Total revenues		—			—			422			46			(14	)		454			—			—			315			55		(19	)		351
Expenses
Cost of VOI sales		—			—			28			4			—			32			—			—			9			5		—			14
Sales and marketing		—			—			187			11			(12	)		186			—			—			157			17		(17	)		157
Financing		—			—			4			10			(2	)		12			—			—			5			10		(2	)		13
Resort and club management		—			—			12			—			—			12			—			—			12			—		—			12
Rental and ancillary services		—			—			36			1			—			37			—			—			35			2		—			37
General and administrative		—			—			29			—			—			29			—			—			21			—		—			21
Depreciation and amortization		—			—			13			—			—			13			—			—			12			—		—			12
License fee expense		—			—			25			1			—			26			—			—			22			—		—			22
Cost reimbursements		—			—			42			1			—			43			—			—			48			1		—			49
Total operating expenses		—			—			376			28			(14	)		390			—			—			321			35		(19	)		337
Interest expense		—			(11	)		—			—			—			(11	)		—			(10	)		—			—		—			(10	)
Dividends from subsidiary		150			150			—			—			(300	)		—			12			12			—			—		(24	)		—
Equity in earnings from unconsolidated affiliates		—			—			2			—			—			2			—			—			3			—		—			3
Other loss, net		—			—			(1	)		—			—			(1	)
Other gain, net																				—			—			2			—		—			2
Income before income taxes		150			139			47			18			(300	)		54			12			2			(1	)		20		(24	)		9
Income tax expense		—			—			(14	)		(1	)		—			(15	)		—			—			(1	)		—		—			(1	)
Income before equity in earnings from subsidiaries		150			139			33			17			(300	)		39			12			2			(2	)		20		(24	)		8
Equity in (losses) earnings from subsidiaries		(111	)		50			17			—			44			—
Equity in earnings from subsidiaries																				(4	)		18			20			—		(34	)		—
Net income	$	39		$	189		$	50		$	17		$	(256	)	$	39		$	8		$	20		$	18		$	20	$	(58	)	$	8

For the Three Months Ended June 30, 2018

($ in millions)

Parent

Issuers

Guarantors

Non-
Guarantors

Eliminations

Total

Revenues

Sales of VOIs, net

$
—

$
—

$
248

$
2

$
—

$
250

Sales, marketing, license and other fees

—

—

147

1

(2
)

146

Financing

—

—

17

23

(1
)

39

Resort and club management

—

—

37

—

—

37

Rental and ancillary services

—

—

53

—

—

53

Cost reimbursements

—

—

37

1

—

38

Total revenues

—

—

539

27

(3
)

563

Expenses

Cost of VOI sales

—

—

61

—

—

61

Sales and marketing

—

—

193

2

(2
)

193

Financing

—

—

5

8

(1
)

12

Resort and club management

—

—

11

—

—

11

Rental and ancillary services

—

—

30

—

—

30

General and administrative

—

—

30

—

—

30

Depreciation and amortization

—

—

8

—

—

8

License fee expense

—

—

25

—

—

25

Cost reimbursements

—

—

37

1

—

38

Total operating expenses

—

—

400

11

(3
)

408

Interest expense

—

(8
)

—

—

—

(8
)
Equity in losses from unconsolidated
affiliates

—

—

(2
)

—

—

(2
)
Other gain, net

—

—

1

—

—

1

Income (loss) before income taxes

—

(8
)

138

16

—

146

Income tax expense

—

—

(39
)

—

—

(39
)
Income (loss) before equity in earnings
(loss) from subsidiaries

—

(8
)

99

16

—

107

Equity in earnings from subsidiaries

107

115

16

—

(238
)

—

Net income

$
107

$
107

$
115

$
16

$
(238
)

$
107

	For the Six Months Ended June 30, 2019																		For the Three Months Ended March 31, 2019
($ in millions)	Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total			Parent			Issuers			Guarantors			Non- Guarantors		Eliminations			Total
Revenues
Sales of VOIs, net	$	—		$	—		$	210		$	35		$	—		$	245		$	—		$	—		$	107		$	18	$	—		$	125
Sales, marketing, license and other fees		—			—			305			4			(23	)		286
Sales, marketing, brand and other fees																				—			—			151			1		(11	)		141
Financing		—			—			38			50			(4	)		84			—			—			18			25		(2	)		41
Resort and club management		—			—			85			—			—			85			—			—			42			—		—			42
Rental and ancillary services		—			—			118			1			—			119			—			—			58			1		—			59
Cost reimbursements		—			—			83			2			—			85			—			—			41			1		—			42
Total revenues		—			—			839			92			(27	)		904			—			—			417			46		(13	)		450
Expenses
Cost of VOI sales		—			—			61			7			—			68			—			—			33			3		—			36
Sales and marketing		—			—			357			22			(23	)		356			—			—			170			11		(11	)		170
Financing		—			—			8			21			(4	)		25			—			—			4			11		(2	)		13
Resort and club management		—			—			23			—			—			23			—			—			11			—		—			11
Rental and ancillary services		—			—			70			2			—			72			—			—			34			1		—			35
General and administrative		—			—			54			—			—			54			—			—			27			—		—			27
Depreciation and amortization		—			—			23			—			—			23			—			—			8			—		—			8
License fee expense		—			—			47			2			—			49			—			—			22			1		—			23
Cost reimbursements		—			—			83			2			—			85			—			—			41			1		—			42
Total operating expenses		—			—			726			56			(27	)		755			—			—			350			28		(13	)		365
Interest expense		—			(21	)		—			—			—			(21	)		—			(10	)		—			—		—			(10	)
Dividends from subsidiary		275			275			—			—			(550	)		—			125			125			—			—		(250	)		—
Equity in earnings from unconsolidated affiliates		—			—			3			—			—			3			—			—			1			—		—			1
Other loss, net		—			—			(2	)		—			—			(2	)		—			—			(1	)		—		—			(1	)
Income before income taxes		275			254			114			36			(550	)		129
Income (loss) before income taxes																				125			115			67			18		(250	)		75
Income tax expense		—			—			(34	)		(1	)		—			(35	)		—			—			(20	)		—		—			(20	)
Income before equity in earnings from subsidiaries		275			254			80			35			(550	)		94
Equity in (losses) earnings from subsidiaries		(181	)		115			35			—			31			—
Income (loss) before equity in earnings (loss) from subsidiaries																				125			115			47			18		(250	)		55
Equity in (loss) earnings from subsidiaries																				(70	)		65			18			—		(13	)		—
Net income	$	94		$	369		$	115		$	35		$	(519	)	$	94		$	55		$	180		$	65		$	18	$	(263	)	$	55

For the Six Months Ended June 30, 2018

($ in millions)

Parent

Issuers

Guarantors

Non-
Guarantors

Eliminations

Total

Revenues

Sales of VOIs, net

$
—

$
—

$
325

$
3

$
—

$
328

Sales, marketing, license and other fees

—

—

273

2

(4
)

271

Financing

—

—

37

42

(2
)

77

Resort and club management

—

—

76

—

—

76

Rental and ancillary services

—

—

103

1

—

104

Cost reimbursements

—

—

72

2

—

74

Total revenues

—

—

886

50

(6
)

930

Expenses

Cost of VOI sales

—

—

80

—

—

80

Sales and marketing

—

—

354

4

(4
)

354

Financing

—

—

10

15

(2
)

23

Resort and club management

—

—

22

—

—

22

Rental and ancillary services

—

—

57

1

—

58

General and administrative

—

—

53

—

—

53

Depreciation and amortization

—

—

16

—

—

16

License fee expense

—

—

48

—

—

48

Cost reimbursements

—

—

72

2

—

74

Total operating expenses

—

—

712

22

(6
)

728

Interest expense

—

(15
)

—

—

—

(15
)
Equity in losses from unconsolidated
affiliates

—

—

(1
)

—

—

(1
)
Income (loss) before income taxes

—

(15
)

173

28

—

186

Income tax expense

—

—

(49
)

—

—

(49
)
Income (loss) before equity in earnings
(loss) from subsidiaries

—

(15
)

124

28

—

137

Equity in earnings from subsidiaries

137

152

28

—

(317
)

—

Net income

$
137

$
137

$
152

$
28

$
(317
)

$
137

	For the Six Months Ended June 30, 2019																		For the Three Months Ended March 31, 2020
($ in millions)	Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total			Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total
Operating Activities
Net cash provided by (used in) operating activities	$	—		$	254		$	(43	)	$	136		$	(275	)	$	72		$	8		$	20		$	186		$	(104	)	$	(57	)	$	53
Investing Activities
Capital expenditures for property and equipment		—			—			(17	)		—			—			(17	)		—			—			(1	)		(2	)		—			(3	)
Software capitalization costs		—			—			(11	)		—			—			(11	)		—			—			(5	)		—			—			(5	)
Investments in unconsolidated affiliates		—			—			(2	)		—			—			(2	)		—			—			—			—			—			—
Dividends from subsidiary		275			275			—			—			(550	)		—			12			12			—			—			(24	)		—
Net cash used in (provided by) investing activities		275			275			(30	)		—			(550	)		(30	)
Net cash provided by (used in) investing activities																				12			12			(6	)		(2	)		(24	)		(8	)
Financing Activities
Issuance of debt		—			410			—			—			—			410			—			495			—			—			—			495
Issuance of non-recourse debt		—			—			—			15			—			15			—			—			—			195			—			195
Repayment of debt		—			(100	)		(5	)		—			—			(105	)		—			(57	)		—			—			—			(57	)
Repayment of non-recourse debt		—			—			—			(79	)		—			(79	)		—			—			—			(58	)		—			(58	)
Debt issuance costs		—			—			—			(2	)		—			(2	)
Repurchase and retirement of common stock		(271	)		—			—			—			—			(271	)		(10	)		—			—			—			—			(10	)
Payment of withholding taxes on vesting of restricted stock units		—						(3	)		—			—			(3	)		(2	)		—			—			—			—			(2	)
Proceeds from employee stock plan purchases		—			—			2			—			—			2
Other financing activity		—			—			(2	)		—			—			(2	)		—			—			(1	)		—			—			(1	)
Intercompany transfers		(1	)		(839	)		81			(66	)		825			—			(6	)		(470	)		405			(10	)		81			—
Net cash used in (provided by) financing activities		(272	)		(529	)		73			(132	)		825			(35	)
Net cash (used in) provided by financing activities																				(18	)		(32	)		404			127			81			562
Net increase in cash, cash equivalents and restricted cash		3			—			—			4			—			7			2			—			584			21			—			607
Cash, cash equivalents and restricted cash, beginning of period		4			—			134			42			—			180			2			—			92			58			—			152
Cash, cash equivalents and restricted cash, end of period	$	7		$	—		$	134		$	46		$	—		$	187		$	4		$	—		$	676		$	79		$	—		$	759

	For the Six Months Ended June 30, 2018																	For the Three Months Ended March 31, 2019
($ in millions)	Parent		Issuers			Guarantors			Non- Guarantors			Eliminations			Total			Parent			Issuers			Guarantors			Non- Guarantors			Eliminations			Total
Operating Activities
Net cash (used in) provided by operating activities	$	—	$	(14	)	$	42		$	(205	)	$	43		$	(134	)
Net cash provided by (used in) operating activities																		$	—		$	140		$	(2	)	$	66		$	(190	)	$	14
Investing Activities
Capital expenditures for property and equipment		—		—			(18	)		(2	)		—			(20	)		—			—			(5	)		(1	)		—			(6	)
Software capitalization costs		—		—			(9	)		—			—			(9	)		—			—			(4	)		—			—			(4	)
Return of investment from unconsolidated affiliates		—		—			11			—			—			11
Investment in unconsolidated affiliates		—		—			(5	)		—			—			(5	)
Dividends from subsidiary																			100			100			—			—			(200	)		—
Net cash used in investing activities		—		—			(21	)		(2	)		—			(23	)		100			100			(9	)		(1	)		(200	)		(10	)
Financing Activities
Issuance of debt		—		160			—			—			—			160			—			195			—			—			—			195
Issuance of non-recourse debt		—		—			—			100			—			100
Repayment of debt																			—			(23	)		—			—			—			(23	)
Repayment of non-recourse debt																			—			—			—			(40	)		—			(40	)
Repurchase and retirement of common stock		—		(112	)		—			—			—			(112	)		—			(92	)		—			—			—			(92	)
Repayment of non-recourse debt		—		—			—			(80	)		—			(80	)
Repayment of debt		—		(5	)		—			—			—			(5	)
Debt issuance costs		—		—			—			(2	)		—			(2	)
Payment of withholding taxes on vesting of restricted stock units		—		(1	)		—			—			—			(1	)		—			(2	)		—			—			—			(2	)
Capital contribution		—		3			—			—			—			3
Intercompany transfers		—		(31	)		(111	)		185			(43	)		—			(91	)		(318	)		37			(18	)		390			—
Net cash provided by (used in) financing activities		—		14			(111	)		203			(43	)		63
Net decrease in cash, cash equivalents and restricted cash		—		—			(90	)		(4	)		—			(94	)
Net cash (used in) provided by financing activities																			(91	)		(240	)		37			(58	)		390			38
Net increase in cash, cash equivalents and restricted cash																			9			—			26			7			—			42
Cash, cash equivalents and restricted cash, beginning of period		—		—			259			38			—			297			4			—			134			42			—			180
Cash, cash equivalents and restricted cash, end of period	$	—	$	—		$	169		$	34		$	—		$	203		$	13		$	—		$	160		$	49		$	—		$	222

The novel coronavirus (“COVID-19”) pandemic has significantly impacted the hospitality industry due to travel restrictions and stay-at-home directives that have resulted in cancellations and significantly reduced travel around the world. As a result of the reduction in travel, we have closed substantially all of our resorts and sales centers for an indeterminate duration. In ~~July 2019,~~response to the impact of COVID-19, we ~~executed~~have taken actions to ensure the ~~following transactions:~~continuity of our business and operations, including furloughing approximately 67 percent of our employees, implementing salary reductions for the remaining active employees, eliminating all discretionary spending, and reducing our planned investment in new inventory by approximately $200 million.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

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

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

For additional information regarding factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements in this Report, please see the risk factors discussed in “Part I—Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, as supplemented and updated by the risk factors discussed in “Part II-Item 1A. Risk Factors” of this Report, as well as those described from time to time other periodic reports that we file with the SEC. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business. Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly update or ~~review~~revise any forward-looking statement, whether as a result of new information, future developments, changes in management’s expectations, or otherwise.

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

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

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

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

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

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

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

We are a ~~growing~~ timeshare company that markets and sells VOIs, manages resorts in top leisure and urban destinations, and operates a points-based vacation club. As of ~~June 30, 2019,~~March 31, 2020, we have 5759 properties, representing ~~9,177~~9,551 units, ~~which~~that are primarily located in ~~iconic~~ vacation destinations such as ~~the~~Orlando, Las Vegas, Hawaiian Islands, New York City, ~~Orlando~~Washington D.C., and ~~Las Vegas,~~South Carolina and feature spacious, condominium-style accommodations with superior amenities and quality service. As of ~~June 30, 2019,~~March 31, 2020, we have approximately ~~317,000~~328,000 Hilton Grand Vacations Club ~~(the~~and Hilton Club (collectively the “Club”) members. Club members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations resort or any property in the Hilton system of 1718 industry-leading brands across ~~more than 5,700~~approximately 6,000 properties, as well as numerous experiential vacation options, such as cruises and guided tours. Our business has been adversely impacted by the COVID-19 pandemic and its effects on the global economy, including the various government orders and mandates for closures of non-essential businesses. Please see “COVID-19 and Subsequent Events” and other discussions throughout this Report for additional information regarding such impacts.

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

Our primary product is the marketing and selling of fee-simple VOIs deeded in perpetuity and right to use real estate interests, developed either by us or by third parties. This ownership interest is an interest in real estate generally equivalent to one week ~~annually~~on an annual basis, at the timeshare resort where the VOI was purchased. Traditionally, timeshare operators have funded 100 percent of the investment necessary to acquire land and construct timeshare properties. In 2010, we began sourcing VOIs through fee-for-service and just-in-time agreements with third-party developers and have ~~successfully transformed from a capital-intensive business to one that is highly capital-efficient.~~focused our inventory strategy on developing an optimal inventory mix focused on developed properties as well as fee-for-service and just-in-time agreements. The fee-for-service agreements enable us to generate fees from the sales and marketing of the VOIs and Club memberships and from the management of the timeshare properties without requiring us to

fund acquisition and construction costs. The just-in-time agreements enable us to source VOI inventory in a manner that allows us to correlate the timing of acquisition of the inventory with the sale to purchasers. Sales of owned, including just-in-time inventory, generally result in greater Adjusted EBITDA contributions, while fee-for-service sales require less initial investment and allow us to accelerate our sales growth. Both sales of owned inventory and fee-for-service sales generate long-term, predictable fee streams, by adding to the Club membership base and properties under management, that generate strong returns on invested capital.

For the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, sales from fee-for-service, just-in-time and developed inventory sources were 5553 percent, 1725 percent and 2822 percent, respectively, of contract sales. See “Key Business and Financial Metrics and Terms Used by Management——Real Estate Sales Metrics” for additional discussion of contract sales. Based on our trailing twelve months sales pace, we have access to approximately seven years of future inventory, with capital efficient arrangements representing approximately 5652 percent of that supply. We believe that the visibility into our long-term supply allows us to efficiently manage inventory to meet predicted sales, reduce capital investments, minimize our exposure to the cyclicality of the real estate market and mitigate the risks of entering into new markets.

We sell our vacation ownership products under the Hilton Grand Vacations brand primarily through our distribution network of both in-market and off-site sales centers. Our products are currently marketed for sale throughout the United States and the Asia-Pacific region. We operate sales distribution centers in major markets and popular leisure destinations with year-round demand and a history of being a friendly environment for vacation ownership. We have sales distribution centers in Las Vegas, Orlando, Oahu, Japan, New York, Myrtle Beach, Waikoloa, Washington D.C., Hilton Head, Park City, Chicago, Korea and Carlsbad. Our marketing and sales activities are based on targeted direct marketing and a highly personalized sales approach. We use targeted direct marketing to reach potential members who are identified as having the financial ability to pay for our products and have an affinity with Hilton and are frequent leisure travelers. Tour flow quality impacts key metrics such as close rate and VPG, defined in “Key Business and Financial Metrics and Terms Used by Management——Real Estate Sales Metrics.” Additionally, the quality of tour flow impacts sales revenue and the collectability of our timeshare financing receivables. For the three months ended March 31, 2020, 55 percent of our contract sales were to our existing owners.

We provide financing for members purchasing our developed and acquired inventory and generate interest income. Our timeshare financing receivables are collateralized by the underlying VOIs and are generally structured as 10-year, fully-amortizing ~~receivables~~loans that bear a fixed interest rate typically ranging from ~~nine~~9 percent to 18 percent per annum. Financing propensity was 63 percent and 65 percent for the three months ended March 31, 2020 and 2019, respectively. We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by contract sales volume of all contracts originated in the period.

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

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

Some of our timeshare financing receivables have been pledged as collateral in our securitization transactions, which have in the past and may in the future provide funding for our business activities. In these securitization transactions, special purpose entities are established to issue various classes of debt securities which are generally collateralized by a single pool of assets, consisting of timeshare financing receivables that we service and related cash deposits. For additional information see Note 5: 6: Timeshare Financing Receivables in our unaudited condensed consolidated financial statements.

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

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

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

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

~~The~~We measure our performance using the following ~~are not recognized terms under U.S. GAAP:~~key operating metrics:

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

For further information see Item 8. Financial Statements and Supplementary Data - Note 2: Basis of Presentation and Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

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

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

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

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

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

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

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

Accordingly, as of March 31, 2020 we had temporarily closed substantially all of our properties and suspended our U.S sales operations and closed such sales offices. In addition, we have stopped accepting reservations at our U.S., Europe, and Barbados resorts. We also furloughed more than 6,100 of our approximately 9,100 employees and implemented hiring freezes. We currently anticipate that these temporary closures. modified operating plans, non-acceptance of reservations, and related actions will be in place through the end of April 2020, after which we will re-evaluate our decision on a case-by-case basis after taking into account various government orders and mandates at such time, as well as the safety of our owners, guests and employees. Our sales operations in Japan and South Korea remain open on a limited basis.

In April 2020, in response to the impact of the COVID-19 pandemic, we filed a Current Report on Form 8-K disclosing that our executive officers and the Board of Directors had agreed to temporarily reduce officers’ base salaries and forgo non-employee directors’ annual cash retainers. In addition, we disclosed that we had drawn down the substantial remainder of our available borrowings under our credit facility through net borrowings of an additional $445 million. After taking into account the other borrowings and repayments over the course of March 2020, the total amount outstanding under our credit facility immediately thereafter was $761 million at an average interest rate of 2.60%.

The COVID-19 pandemic has created an unprecedented and challenging time. Our current focus is on taking critical actions that are aimed at positioning the Company in sound position from an operational, liquidity, credit access, and compliance perspective for a strong recovery when the impact of COVID-19 subsides. As discussed above, we have taken several steps to enhance our liquidity, preserve cash, reduce our expenditures and provide financial flexibility, and our management is continuing to assess the evolving situation and will take additional actions as appropriate. We will continue to monitor the COVID-19 pandemic and its related impact, including the various government mandates and orders that have caused us to close substantially all of our properties, and any new recommended or required business practice, and start to re-open our properties and normalize our operations. In the meantime, we will continue to work on key initiatives, such as our digital strategy and other sales strategy that may not be impacted by the various closures, so that we are as well positioned as possible once the impact of COVID-19 has eased.

Any sustained material adverse impact on our revenues, net income and other operating results due to COVID-19 could cause our financial covenants under our debt obligations to be adversely affected. If we are unable to comply with or obtain potential modifications to such covenants prior to any breaches, we may trigger events of defaults under these arrangements. We are currently in negotiations with our lenders to amend such covenants as needed and believe we will be able to reach an agreement in advance of any such default.

Three ~~and Six~~ Months Ended ~~June 30, 2019~~March 31, 2020 Compared with the Three ~~and Six~~ Months Ended ~~June 30, 2018~~March 31, 2019

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

	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance						Three Months Ended March 31,						Variance
($ in millions)	2019			2018			$			%			2019			2018			$			%			2020			2019			$			%
Revenues:
Real estate sales and financing	$	308		$	435		$	(127	)		(29.2	)%	$	615		$	676		$	(61	)		(9.0	)%	$	206		$	307		$	(101	)		(32.9	)%
Resort operations and club management		114			98			16			16.3			224			196			28			14.3			104			110			(6	)		(5.5	)
Segment revenues		422			533			(111	)		(20.8	)		839			872			(33	)		(3.8	)		310			417			(107	)		(25.7	)
Cost reimbursements		43			38			5			13.2			85			74			11			14.9			49			42			7			16.7
Intersegment eliminations⁽¹⁾		(11	)		(8	)		(3	)		37.5			(20	)		(16	)		(4	)		25.0			(8	)		(9	)		1			(11.1	)
Total revenues	$	454		$	563		$	(109	)		(19.4	)	$	904		$	930		$	(26	)		(2.8	)	$	351		$	450		$	(99	)		(22.0	)

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

	Three Months Ended June 30,					Variance						Six Months Ended June 30,				Variance						Three Months Ended March 31,					Variance
($ in millions)	2019		2018			$			%			2019		2018		$			%			2020			2019		$			%
Net Income	$	39	$	107		$	(68	)		(63.6	)%	$	94	$	137	$	(43	)		(31.4	)%	$	8		$	55	$	(47	)		(85.5	)%
Interest expense		11		8			3			37.5			21		15		6			40.0			10			10		—			—
Income tax expense		15		39			(24	)		(61.5	)		35		49		(14	)		(28.6	)		1			20		(19	)		(95.0	)
Depreciation and amortization		13		8			5			62.5			23		16		7			43.8			12			8		4			50.0
Interest expense, depreciation and amortization included in equity in earnings (losses) from unconsolidated affiliates		1		1			—			—			2		2		—			—
Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates																							1			1		—			—
EBITDA		79		163			(84	)		(51.5	)		175		219		(44	)		(20.1	)		32			94		(62	)		(66.0	)
Other loss (gain)		1		(1	)		2		NM⁽¹⁾				2		—		2		NM⁽¹⁾
Other (gain) loss, net																							(2	)		1		(3	)	NM⁽¹⁾
Share-based compensation expense(2)		7		5			2			40.0			12		8		4			50.0			(2	)		5		(7	)	NM⁽¹⁾
Other adjustment items⁽²⁾⁽³⁾		3		8			(5	)		(62.5	)		3		10		(7	)		(70.0	)		5			2		3		NM⁽¹⁾
Adjusted EBITDA	$	90	$	175		$	(85	)		(48.6	)	$	192	$	237	$	(45	)		(19.0	)	$	33		$	102	$	(69	)		(67.6	)

Three Months Ended June 30,

Variance

Six Months Ended June 30,

Variance

($ in millions)

2019

2018

$

%

2019

2018

$

%

Adjusted EBITDA:

Real estate sales and financing⁽²⁾

$
69

$
163

$
(94
)

(57.7
)%

$
149

$
207

$
(58
)

(28.0
)%
Resort operations and club
management⁽²⁾

66

58

8

13.8

131

117

14

12.0

Segment Adjusted EBITDA

135

221

(86
)

(38.9
)

280

324

(44
)

(13.6
)
Adjustments:

Adjusted EBITDA from
unconsolidated affiliates

3

(1
)

4

NM⁽¹⁾

5

1

4

NM⁽¹⁾

License fee expense

(26
)

(25
)

(1
)

4.0

(49
)

(48
)

(1
)

2.1

General and administrative⁽³⁾

(22
)

(20
)

(2
)

10.0

(44
)

(40
)

(4
)

10.0

Adjusted EBITDA

$
90

$
175

$
(85
)

(48.6
)

$
192

$
237

$
(45
)

(19.0
)

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

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

Real estate sales and financing segment revenues decreased by ~~$127~~$101 million for the three months ended ~~June 30, 2019,~~March 31, 2020, compared to the same period in ~~2018,~~2019, primarily due to a ~~$136~~$99 million decrease in sales revenue, ~~partially offset by~~ a $5 million ~~increase~~decrease in marketing revenue and ~~other fees mainly associated with higher vacation package sales and~~ a $4$3 million increase in financing revenue related to an increase in interest income from higher outstanding timeshare receivables balance and an increase in servicing fees. Sales revenue decreased for the three months ended June 30, 2019, compared to the same period in 2018, primarily due to a $34 million decrease in revenue recognition from sales of VOIs on one property under construction compared to a $91 million net increase in revenue recognition from the completion of a timeshare resort under construction during the same period in 2018. revenue.

Real estate sales and financing segment Adjusted EBITDA decreased by ~~$94~~$65 million for the three months ended ~~June 30, 2019,~~March 31, 2020, compared to the same period in ~~2018,~~2019, primarily due to the decreases in ~~revenue~~segment revenues associated with ~~the~~ segment performance discussed ~~above.~~

Real estate sales and financing segment revenues decreased by $61 million for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to a $76 million decrease in sales revenue,herein partially offset by ~~(i) an $8 million increase~~decreases in marketing revenue and other fees mainly associated with higher vacation package sales, (ii) an increase in commission and brand fees due to higher fee-for-service sales at existing fee-for-service properties, and (iii) a $7 million increase in financing revenue related to an increase in interest income from higher outstanding timeshare receivables balance and an increase in servicing fees. Sales revenue decreased for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to a $34 million decrease in revenue recognition from sales of VOIs on one property under construction compared to a $25 million net increase in revenue recognition from the completion of a timeshare resort under construction during the same period in 2018. Realexpenses. In addition, real estate sales and financing segment Adjusted EBITDA ~~decreased~~was impacted by ~~$58~~$11 million ~~for~~one-time payroll related expenses incurred primarily related to payments made to employees’ as a result of operational closures caused by the ~~six months ended June 30, 2019, compared to the same period in 2018, primarily due to the decreases in revenue associated with the segment discussed above.~~COVID-19 pandemic.

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

Resort operations and club management segment revenues ~~increased by $16~~decreased $6 million for the three months ended ~~June 30, 2019,~~March 31, 2020, compared to the same period in ~~2018,~~2019, primarily due to ~~(i)~~a decrease in rental and ancillary services revenue, partially offset by an increase ~~of $6 million~~ in resort and club management revenues due to an increase in Club members as well as higher resort management revenue from the launch of new properties subsequent to the second quarter of 2018 and (ii) an increase of $7 million in rental and ancillary services revenues. Rental and ancillary services revenue increased due to higher transient rental room revenue, primarily due to the June 2018 acquisition of an operating hotel and higher club inventory rentals at our developed and fee-for-service properties.revenue. Resort operations and club management segment Adjusted EBITDA ~~increased by $8~~decreased $10 million for the three months ended ~~June 30, 2019,~~March 31, 2020, compared to the same period in ~~2018,~~2019, primarily due to the ~~increases~~decreases in ~~revenues~~segment margin associated with ~~the~~ segment ~~partially offset by an increase of $8 million in segment expenses primarily due to the June 2018 acquisition of an operating hotel.~~

Resort operations and club management segment revenues increased by $28 million for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to (i) an increase of $9 million in resort and club management revenues primarily due to an increase in Club members and (ii) an increase of $15 million in rental and ancillary services revenues. Rental and ancillary services revenue increased primarily due to higher transient rental room revenue, primarily due to the June 2018 acquisition of an operating hotel and higher club inventory rentals at our developed and fee-for-service properties. Resort operations and club management segment Adjusted EBITDA increased by $14 million for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to the increases in revenues associated with the segment, partially offset by an increase of $15 million in segment expenses primarily due to the June 2018 acquisition of an operating hotel.performance discussed herein.

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

	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance						Three Months Ended March 31,						Variance
($ in millions, except Tour flow and VPG)	2019			2018			$			%			2019			2018			$			%			2020			2019			$			%
Sales of VOIs, net	$	120		$	250		$	(130	)		(52.0	)%	$	245		$	328		$	(83	)		(25.3	)%	$	56		$	125		$	(69	)		(55.2	)%
Adjustments:
Fee-for-service sales⁽²⁾		185			193			(8	)		(4.1	)		375			363			12			3.3			130			190			(60	)		(31.6	)
Provision for financing receivables losses		24			18			6			33.3			38			30			8			26.7			37			14			23		NM⁽¹⁾
Reportability and other:
Net deferral (recognition) of sales of VOIs under construction⁽³⁾		34			(91	)		125		NM⁽¹⁾				34			(25	)		59		NM⁽¹⁾				47			—			47		NM⁽¹⁾
Fee-for-service sales upgrades, net		(10	)		(11	)		1			(9.1	)		(24	)		(19	)		(5	)		26.3
Fee-for-service sale upgrades, net																										(8	)		(14	)		6			(42.9	)
Other⁽⁴⁾		10			(2	)		12		NM⁽¹⁾				17			9			8			88.9			(18	)		7			(25	)	NM⁽¹⁾
Contract sales	$	363		$	357		$	6			1.7		$	685		$	686		$	(1	)		(0.1	)	$	244		$	322		$	(78	)		(24.2	)
Tour flow		101,712			94,269			7,443			7.9			184,356			171,969			12,387			7.2			66,965			82,644			(15,679	)		(19.0	)
VPG	$	3,393		$	3,597		$	(204	)		(5.7	)	$	3,520		$	3,778		$	(258	)		(6.8	)	$	3,506		$	3,677		$	(171	)		(4.7	)

Contract sales ~~increased~~decreased $78 million for the three months ended ~~June 30, 2019,~~March 31, 2020, compared to the same period in ~~2018,~~2019, primarily due to ~~eight percent growth~~a decrease in ~~tour flow, partially offset by lower~~ VPG from both a ~~50-basis~~29-basis point decline in close rate and average transaction price reduction. Contract sales was relatively flat for the six months ended June 30, 2019, compared to the same period in 2018, primarily due to lower VPG from both an 80-basis point decline in close rate anda 5 percent average transaction price reduction ~~offset by~~coupled with a ~~seven percent improvement~~decrease in tour ~~flow.~~flow primarily related to the temporary closure of substantially all of our properties and suspension of sales and related operations due to the COVID-19 pandemic.

	Three Months Ended June 30,						Variance						Six Months Ended June 30,						Variance						Three Months Ended March 31,						Variance
($ in millions)	2019			2018			$			%			2019			2018			$			%			2020			2019			$			%
Sales of VOIs, net	$	120		$	250		$	(130	)		(52.0	)%	$	245		$	328		$	(83	)		(25.3	)%
Sales, marketing, brand and other fees		145			146			(1	)		(0.7	)		286			271			15			5.5		$	106		$	141		$	(35	)		(24.8	)%
Less:
Marketing revenue and other fees		38			33			5			15.2			68			60			8			13.3			25			30			(5	)		(16.7	)
Commissions and brand fees																										81			111			(30	)		(27.0	)
Sales of VOIs, net																										56			125			(69	)		(55.2	)
Sales revenue		227			363			(136	)		(37.5	)		463			539			(76	)		(14.1	)		137			236			(99	)		(41.9	)
Less:
Cost of VOI sales		32			61			(29	)		(47.5	)		68			80			(12	)		(15.0	)		14			36			(22	)		(61.1	)
Sales and marketing expense, net⁽¹⁾		139			152			(13	)		(8.6	)		270			278			(8	)		(2.9	)		125			131			(6	)		(4.6	)
Real estate margin	$	56		$	150		$	(94	)		(62.7	)	$	125		$	181		$	(56	)		(30.9	)	$	(2	)	$	69		$	(71	)	NM⁽¹⁾
Real estate margin percentage		24.7	%		41.3	%								27.0	%		33.6	%								(1.5	)%		29.2	%

Sales revenue decreased for the three months ended ~~June 30, 2019,~~March 31, 2020, compared to the same period in ~~2018,~~2019, primarily due to (i) decreases in sales as a ~~$34~~result of the temporary closure of substantially all of our properties and suspension of our sales and related operations as a result of the COVID-19 pandemic, (ii) $47 million ~~decrease in revenue recognition from~~of deferrals of VOI sales of ~~VOIs on one property under construction compared to a $91 million net increase in revenue recognition from the completion of a timeshare resort~~projects under construction during the three months ended March 31, 2020, compared to the same period in ~~2018 and (ii) a decrease in VPG driven by a decrease in the close rate and a reduction in the average transaction price, and~~2019 where there were no projects under construction, (iii) a ~~decrease~~$23 million incremental increase to the provision for financing receivables related to our estimate of $5the impacts to our portfolio as a result of the COVID-19 pandemic and (iv) a $30 million decrease in commission and brand fees as a result of the COVID-19 pandemic and due to ~~lower fee-for-service VOI sales driven by~~ a shift in inventory ~~mix. The decrease in sales revenue was~~mix, partially offset by a $5 million ~~increase~~decrease in marketing revenue and other fees mainly associated with ~~higher~~reduced vacation package ~~sales. The decrease in real estate margin~~sales and ~~margin percentage~~lower redemptions of marketing packages as a result of the COVID-19 pandemic.

Financing revenue increased by $3 million for the three months ended ~~June 30, 2019, compared to 2018, was primarily due the reduction in sales revenue, partially offset by deferred expenses from the sales of one property under construction.~~

~~Sales revenue decreased for the six months ended June 30, 2019,~~March 31, 2020, compared to the same period in 2018, primarily due to (i) a $34 million decrease in revenue recognition from sales of VOIs on one property under construction compared to a $25 million net increase in revenue recognition from the completion of a timeshare resort under construction during the same period in 2018. The decrease in sales revenue was partially offset by (i) an increase of $8 million in commission and brand fees due to higher fee-for-service sales at our existing fee-for-service properties and (ii) an $8 million increase in marketing revenue and other fees mainly associated with higher vacation package sales. The decrease in real estate margin and margin percentage for the six months ended June 30, 2019, ~~compared to the same period in 2018, was primarily due to the reduction in sales revenue, partially offset by deferred expenses from the sales of one property under construction.~~

Three Months Ended June 30,

Variance

Six Months Ended June 30,

Variance

($ in millions)

2019

2018

$

%

2019

2018

$

%

Interest income

$
36

$
34

$
2

5.9
%

$
72

$
68

$
4

5.9
%
Other financing revenue

7

5

2

40.0

12

9

3

33.3

Financing revenue

43

39

4

10.3

84

77

7

9.1

Consumer financing interest expense

7

6

1

16.7

14

10

4

40.0

Other financing expense

5

6

(1
)

(16.7
)

11

13

(2
)

(15.4
)
Financing expense

12

12

—

—

25

23

2

8.7

Financing margin

$
31

$
27

$
4

14.8

$
59

$
54

$
5

9.3

Financing margin percentage

72.1
%

69.2
%

70.2
%

70.1
%

~~Financing revenue increased by $4 million and $7 million for the three and six months ended June 30, 2019, respectively, compared to the same periods in 2018, is~~ due to higher interest income resulting from ~~higher~~an increase in the weighted average ~~outstanding~~interest rate we receive on our timeshare financing receivables balance ~~during those respective periods~~ and an increase in other financing revenue related to higher loan servicing ~~revenues.~~fees. Financing margin and finance margin percentage increased for the three months ended ~~June 30, 2019,~~March 31, 2020, compared to the same period in ~~2018, primarily due increases in financing revenue. Financing margin increased for the three and six months ended June 30,~~ 2019, ~~compared to the same periods in 2018,~~ due to anthe increase in interest income ~~as well as loan servicing~~and other financing revenue. ~~Financing margin percentage increased for the three months ended June 30, 2019, primarily due to the increases in the segment revenue.~~

	Three Months Ended June 30,						Variance					Six Months Ended June 30,						Variance					Three Months Ended March 31,						Variance
($ in millions)	2019			2018			$		%			2019			2018			$		%			2020			2019			$			%
Club management revenue	$	26		$	23		$	3		13.0	%	$	52		$	46		$	6		13.0	%	$	25		$	26		$	(1	)		(3.8	)%
Resort management revenue		17			14			3		21.4			33			30			3		10.0			19			16			3			18.8
Resort and club management revenues		43			37			6		16.2			85			76			9		11.8			44			42			2			4.8
Club management expense		7			7			—		—			14			13			1		7.7			7			7			—			—
Resort management expense		5			4			1		25.0			9			9			—		—			5			4			1			25.0
Resort and club management expenses		12			11			1		9.1			23			22			1		4.5			12			11			1			9.1
Resort and club management margin	$	31		$	26		$	5		19.2		$	62		$	54		$	8		14.8		$	32		$	31		$	1			3.2
Resort and club management margin percentage		72.1	%		70.3	%							72.9	%		71.1	%							72.7	%		73.8	%

Resort and club management revenues increased by $2 million for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to the same ~~periods~~period in ~~2018,~~2019, primarily due to a $3 million in increase in resort management revenue driven by (i) an increase of approximately ~~18,000~~17,000 Club members and higher rates pertaining to annual dues and ~~transaction fees and~~ (ii) ~~an increase in~~higher resort management revenue and other fees from the launch of new properties subsequent to ~~second~~the first quarter of ~~2018.~~2019, partially offset by a $1 million decrease in club management revenue primarily related to the refunding of club transaction fees to accommodate our guests impacted by the COVID-19 pandemic. Resort and club management margin ~~and margin~~ percentage ~~increased~~decreased for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to the same ~~periods~~period in ~~2018,~~2019, primarily due to ~~increases~~an increase in segment ~~revenues.~~expenses relating to the launch of new properties subsequent to the first quarter of 2019.

	Three Months Ended June 30,						Variance					Six Months Ended June 30,						Variance					Three Months Ended March 31,						Variance
($ in millions)	2019			2018			$		%			2019			2018			$		%			2020			2019			$			%
Rental revenues	$	53		$	46		$	7		15.2	%	$	105		$	91		$	14		15.4	%	$	47		$	52		$	(5	)		(9.6	)%
Ancillary services revenues		7			7			—		—			14			13			1		7.7			5			7			(2	)		(28.6	)
Rental and ancillary services revenues		60			53			7		13.2			119			104			15		14.4			52			59			(7	)		(11.9	)
Rental expenses		30			25			5		20.0			59			48			11		22.9			32			29			3			10.3
Ancillary services expense		7			5			2		40.0			13			10			3		30.0			5			6			(1	)		(16.7	)
Rental and ancillary services expenses		37			30			7		23.3			72			58			14		24.1			37			35			2			5.7
Rental and ancillary services margin	$	23		$	23		$	—		—		$	47		$	46		$	1		2.2		$	15		$	24		$	(9	)		(37.5	)
Rental and ancillary services margin percentage		38.3	%		43.4	%							39.5	%		44.2	%							28.8	%		40.7	%

Rental and ancillary services revenues ~~and expenses each increased~~decreased by $7 million for the three months ended ~~June 30, 2019 and increased by $15 million and $14 million for the six months ended June 30, 2019, respectively,~~March 31, 2020, compared to the same ~~periods~~period in ~~2018. The increase in revenues and expenses is~~2019, primarily due to the ~~acquisition~~temporary closure of ~~an operating hotel in June 2018. In addition, we had higher club inventory rentals at~~substantially all of our ~~developed~~properties and ~~fee-for-service properties.~~suspension of substantially all of our resort operations as a result of the COVID-19 pandemic. Rental and ancillary services expenses increased $2 million for the three months ended March 31, 2020, compared to the same period in 2019, primarily due to the launch of new properties subsequent to the first quarter of 2019, partially offset by a decrease in transient expenses driven by lower transient arrivals from the temporary suspension of operations due to the COVID-19 pandemic. Rental and ancillary services margin and margin percentage decreased for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to the same ~~periods~~period in ~~2018~~2019 primarily due to the decreases in revenue and increases in ~~segment revenues and~~ expenses discussed above.

	Three Months Ended June 30,				Variance						Six Months Ended June 30,				Variance					Three Months Ended March 31,				Variance
($ in millions)	2019		2018		$			%			2019		2018		$		%			2020		2019		$			%
General and administrative	$	29	$	30	$	(1	)		(3.3	)%	$	54	$	53	$	1		1.9	%	$	21	$	27	$	(6	)		(22.2	)%
Depreciation and amortization		13		8		5			62.5			23		16		7		43.8			12		8		4			50.0
License fee expense		26		25		1			4.0			49		48		1		2.1			22		23		(1	)		(4.3	)

The change in other operating expenses for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to the same ~~periods~~period in ~~2018,~~2019, is primarily due to (i) the reversal of previously recognized expense related to our 2018 and 2019 Performance RSUs which are not expected to achieve certain performance targets and (ii) higher depreciation and amortization expense as a result of additional software placed into service ~~primarily~~ related to systems enhancements and leasehold improvements at newly renovated sales centers subsequent to the ~~Oracle cloud-based information system implementation during the second half~~first quarter of ~~2018 as well as additional depreciation on building and building leasehold improvements.~~

	Three Months Ended June 30,						Variance						Six Months Ended June 30,					Variance						Three Months Ended March 31,						Variance
($ in millions)	2019			2018			$			%			2019			2018		$			%			2020			2019			$			%
Interest expense	$	11		$	8		$	3			37.5	%	$	21		$	15	$	6			40.0	%	$	10		$	10		$	—			—
Equity in (earnings) losses from unconsolidated affiliates		(2	)		2			(4	)	NM⁽¹⁾				(3	)		1		(4	)	NM⁽¹⁾
Other loss (gain), net		1			(1	)		2		NM⁽¹⁾				2			—		2		NM⁽¹⁾
Equity in earnings from unconsolidated affiliates																									(3	)		(1	)		(2	)	NM⁽¹⁾
Other (gain) loss, net																									(2	)		1			(3	)	NM⁽¹⁾
Income tax expense		15			39			(24	)		(61.5	)		35			49		(14	)		(28.6	)		1			20			(19	)		(95.0	)

The change in non-operating expenses for the three ~~and six~~ months ended ~~June 30, 2019,~~March 31, 2020, compared to the same periods in ~~2018,~~2019, is primarily due to ~~(i)~~ an increase in ~~interest expense due to higher average outstanding balance on our senior secured credit facilities~~equity in earnings from unconsolidated affiliates and ~~(ii)~~ a decrease in income tax expense ~~primarily~~ due to ~~lower pre-tax income.~~a decrease in income before income taxes combined with a decrease in the effective tax rate. See Note 14: Income Taxes for additional information.

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

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

To optimize our liquidity and access to capital in light of the significant adverse impact of the COVID-19 pandemic, particularly as substantially all of our properties have temporarily closed and substantially all of our sales, operations and other activities have been suspended, we have undertaken efforts to increase our capital and decrease our expenses. These include the furlough of approximately 67 percent of our employees, temporary salary reductions for the remaining employees’, eliminating discretionary spending, and reducing our planned investment in new inventory by approximately $200 million.

We believe that these ~~sources of~~actions, together with drawing on available borrowings under our Revolver and preserving our capacity under our Timeshare Facility as described above, will provide adequate capital ~~will be adequate~~ to meet our short- and long-term liquidity requirements for operating expenses and other expenditures, including payroll and related benefits, legal costs, and to finance our long-term growth plan and capital expenditures for the foreseeable future.

~~We believe~~As we are not able to estimate the date that the suspensions of resort and sales operations will be lifted, we may need to take additional actions to ensure the continuity of our ~~capital allocation strategy provides adequate funding for~~business. Any sustained material adverse impact on our ~~operations, is flexible enough~~revenues, net income and other operating results due to ~~fund~~COVID-19 could cause our ~~development pipeline, securitizes the optimal level of receivables at metrics setting the benchmark for the industry, and provides the ability~~financial covenants under our debt obligations to be ~~strategically opportunistic~~adversely affected. If we are unable to comply with or obtain potential modifications to such covenants prior to any breaches, we may trigger events of defaults under these arrangements. We are currently in ~~the marketplace, while providing returns~~negotiations with our lenders to ~~our shareholders. We have made commitments with developers~~amend such covenants as needed and believe we will be able to ~~purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand. As~~reach an agreement in advance of ~~June 30, 2019, our inventory-related purchase commitment was $511 million over twelve years of which we expect to purchase $38 million for the remaining of 2019.~~any such default.

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

	Six Months Ended June 30,						Variance						Three Months Ended March 31,						Variance
($ in millions)	2019			2018			$			%			2020			2019			$
Net cash provided by (used in):
Operating activities	$	72		$	(134	)	$	206		NM⁽¹⁾			$	53		$	14		$	39
Investing activities		(30	)		(23	)		(7	)		30.4	%		(8	)		(10	)		2
Financing activities		(35	)		63			(98	)	NM⁽¹⁾				562			38			524

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

The change in net cash flows provided by ~~(used in)~~ operating activities for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, compared to the same period in ~~2018~~2019 was primarily due to ~~(i)~~ a reduction in the purchase and development of real estate for future conversion to inventory, ~~and (ii) a federal tax payment~~partially offset by decreased sources of ~~$63 million made in January of 2018 which was deferred~~cash from ~~2017.~~working capital.

	Six Months Ended June 30,				Three Months Ended March 31,
($ in millions)	2019		2018		2020		2019
VOI spending - owned properties	$	54	$	49	$	17	$	26
VOI spending - fee-for-service upgrades⁽¹⁾		24		13		8		14
Purchases and development of real estate for future conversion to inventory		80		176		5		60
Total VOI inventory spending	$	158	$	238	$	30	$	100

	Six Months Ended June 30,						Variance						Three Months Ended March 31,						Variance
($ in millions)	2019			2018			$			%			2020			2019			$
Capital expenditures for property and equipment	$	(17	)	$	(20	)	$	3			(15.0	)%	$	(3	)	$	(6	)	$	3
Software capitalization costs		(11	)		(9	)		(2	)		22.2			(5	)		(4	)		(1	)
Return of investment from unconsolidated affiliates		—			11			(11	)		(100.0	)
Investments in unconsolidated affiliates		(2	)		(5	)		3			(60.0	)
Net cash used in investing activities	$	(30	)	$	(23	)	$	(7	)		30.4		$	(8	)	$	(10	)	$	2

The change in net cash used in investing activities for the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, compared to the same period in ~~2018,~~2019, was primarily due to ~~an $11 million return~~a reduction of ~~investment from our 25 percent interest in BRE Ace LLC as a result of a distribution received in 2018.~~property and equipment spending.

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

The change in net cash flows ~~(used in)~~ provided by financing activities for the ~~six~~three months ended ~~June 30, 2019 was primarily due to additional borrowings and repayments of debt and non-recourse debt, partially offset by an additional repurchases and retirements of common stock~~March 31, 2020, compared to the same period in ~~2018.~~2019, was primarily due to (i) higher issuances of debt and non-recourse debt relating to our Revolver and Timeshare Facility and (ii) a reduction in share repurchases of common stock, partially offset by higher repayments of debt and non-recourse debt. See Note 11: Debt & Non-recourse Debt in our condensed consolidated financial statements for further discussion.

The following table summarizes our significant contractual obligations as of ~~June 30, 2019:~~March 31, 2020:

	Payments Due by Period										Payments Due by Period
($ in millions)	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
Debt⁽¹⁾	$	1,173	$	56	$	110	$	661	$	346	$	1,272	$	12	$	22	$	1,215	$	23
Non-recourse debt⁽¹⁾		755		205		375		124		51		892		221		444		141		86
Purchase commitments		485		120		275		90		—
Interest on debt⁽¹⁾												258		67		115		61		15
Operating leases												90		19		29		23		19
Inventory purchase commitments												473		101		260		98		14
Other commitments⁽²⁾												26		18		8		—		—
Total contractual obligations	$	2,413	$	381	$	760	$	875	$	397	$	3,011	$	438	$	878	$	1,538	$	157

We have made commitments with developers to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of March 31, 2020, our inventory-related purchase commitment totaled $473 million over 11 years of which we expect to purchase $26 million for the remaining of 2020.

~~See Note 13:~~ ~~Leases~~ We utilize surety bonds related to the sales of VOIs in order to meet regulatory requirements of certain states. The availability, terms and conditions and pricing of such bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity and our ~~unaudited condensed consolidated financial statements for information on our contractual obligations relating to our operating leases~~corporate credit rating. We have commitments from surety providers in the amount of $569 million as of ~~June 30, 2019.~~March 31, 2020 which primarily consist of escrow and construction related bonds.

Our off-balance sheet arrangements as of ~~June 30, 2019~~March 31, 2020 consisted of ~~$511~~$473 million of certain commitments with developers whereby we have committed to purchase vacation ownership units at a future date to be marketed and sold under ~~the~~our Hilton Grand Vacations ~~brand.~~brand and $26 million of other commitments under the normal course of business. The ultimate amount and timing of the acquisitions is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. See Note 19: Commitments and Contingencies in our unaudited condensed consolidated financial statements for a discussion of our off-balance sheet arrangements.

The novel coronavirus (“COVID-19”) pandemic has significantly impacted the hospitality industry due to travel restrictions and stay-at-home directives that have resulted in cancellations and significantly reduced travel around the world. As a result of the reduction in travel, we have closed substantially all of our resorts and sales centers for an indeterminate duration. In response to the impact of COVID-19, we have taken actions to ensure the continuity of our business and operations, including furloughing approximately 67 percent of our employees, implementing salary reductions for the remaining active employees, eliminating all discretionary spending, and reducing our planned investment in new inventory by approximately $200 million.

In ~~July 2019,~~addition, we ~~executed~~drew down on the ~~following transactions:~~availability under our credit facility as a precautionary measure to ensure liquidity for a sustained period. As we are not able to estimate the date that the suspensions of resort and sales operations will be lifted, we may need to take additional actions to ensure the continuity of our business. Any sustained material adverse impact on our revenues, net income and other operating results due to COVID-19 could cause our financial covenants under our debt obligations to be adversely affected. If we are unable to comply with or obtain potential modifications to such covenants prior to any breaches, we may trigger events of defaults under these arrangements. We are currently in negotiations with our lenders to amend such covenants as needed and believe we will be able to reach an agreement in advance of any such default.

The preparation of our unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

We are exposed to market risk from changes in interest rates and currency exchange rates. We manage our exposure to these risks by monitoring available financing alternatives and through pricing policies that may take into account currency exchange rates. During the course of March 2020, we drew down the substantial remainder of our credit facility through net borrowings of an additional $445 million that was available under our revolver facility, for a total amount of $761 million outstanding at an average interest rate of 2.60%, after taking into account repayments. Our exposure to market risk has not materially changed from what we previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

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

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

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

The following table sets forth the contractual maturities, weighted-average interest rates and the total fair values as of ~~June 30, 2019,~~March 31, 2020, for our financial instruments that are materially affected by interest rate risk:

				Maturities by Period																			Maturities by Period
($ in millions)	Weighted Average Interest Rate⁽¹⁾			2019		2020		2021		2022		2023		There- after		Total⁽²⁾		Fair Value		Weighted Average Interest Rate⁽¹⁾			2020		2021		2022		2023		2024		There- after		Total⁽²⁾		Fair Value
Assets:
Fixed-rate securitized timeshare financing receivables		11.950	%	$	40	$	81	$	80	$	77	$	75	$	226	$	579	$	614		12.148	%	$	69	$	92	$	93	$	93	$	92	$	264	$	703	$	729
Fixed-rate unsecuritized timeshare financing receivables		12.685	%		39		58		64		70		75		414		720		773		12.945	%		43		50		54		59		63		362		631		648
Liabilities:⁽³⁾
Fixed-rate debt		4.226	%		111		169		89		65		76		384		894		918		3.930	%		176		162		113		112		343		118		1,024		954
Variable-rate debt⁽⁴⁾		3.797	%		5		10		10		145		582		—		752		758		2.489	%		7		10		205		918		—		—		1,140		1,123

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

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

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

There were no changes in our internal control over financial reporting that occurred during the three months ended ~~June 30, 2019,~~March 31, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We will continue to assess the effectiveness of our internal controls over financial reporting consistent with past practice, particularly in light of the various government mandates and orders of business closures and the resulting remote working conditions as a result of the COVID-19 pandemic.

We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums. Management has evaluated these legal matters and we believe an unfavorable outcome is either reasonably possible or remote and/or for which are not reasonably estimable. While the ultimate results of claims and litigation cannot be predicted with certainty, we expect that the ultimate resolution of all pending or threatened claims and litigation as of ~~June 30, 2019~~March 31, 2020 will not have a material effect on our unaudited condensed consolidated financial statements.

~~As of June 30, 2019, there have been no~~The following represents material changes ~~from~~and updates to the risk factors previously disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2018. These~~2019. The risk factor below and the risk factors included in our Annual Report on Form 10-K may be important to understanding statements in this Form 10-Q and should be read in conjunction with the unaudited condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.

The following risks and those risks described in our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 contain forward-looking statements, and they may not be the only risks facing the Company. The business, financial condition and operating results of the Company can be affected by the risk factors described in ~~the foregoing~~such reports and by other factors currently unknown, or that management presently believes not to be ~~material.~~material, that management has made certain forward looking, projections, estimates or assumptions, or that may rapidly evolve, develop or change, including those that are caused, directly or indirectly, by the COVID-19 pandemic. Any one or more of such factors could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and the trading price of our common stock. Because of these factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

The COVID-19 pandemic has impacted, and will likely continue to have a material adverse impact on, our business, financial condition and results of operations for the foreseeable future, and may also impact our ability to meet certain financial covenants under our debt agreements in the future.

The COVID-19 pandemic has led governments and other authorities around the world to impose measures intended to control its spread, including restrictions on freedom of movement and business operations, such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. As a result, the pandemic has significantly disrupted domestic and international travel, and has adversely impacted commercial activity across the travel, lodging and hospitality industries, including the timeshare industry. The COVID-19 pandemic has had, and is expected to or may continue to have, significant adverse impacts on global economic and market, financial, healthcare, societal, and government regulatory conditions.

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

Although we have taken certain actions to ensure the continuity of our business and operations, including implementing salary reductions, employee furloughs of over 6,100 of our approximately 9,100 employees, and hiring freezes, we may need to take additional actions to ensure the continuity of our business. We drew down on the availability under our credit facility as a precautionary measure to ensure liquidity for a sustained period but we cannot guarantee we will have sufficient liquidity to continue to fund our business depending on the extent and duration of the pandemic and resulting economic downturn. The increase in our level of debt may adversely affect our financial and operating activities or ability to incur additional debt.

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

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

In addition to the foregoing, the COVID-19 pandemic and the resulting adverse and unpredictable economic conditions are likely to implicate or exacerbate the risk factors that we identified in our Annual Report on Form 10-K for the year ended December 31, 2019, which in turn could significantly increase the adverse effects on our business, financial condition, liquidity and results of operations. Such risks include, but are not limited to, the following:

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

~~(c)~~ ~~Issuer Repurchases.~~In April 2019, our board of directors authorized an additional $200 million of shares repurchases under conditions substantially similar to the November 2018 authorization. During the three months ended June 30, 2019, we repurchased the following shares:

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 130^stth day of ~~August 2019.~~April 2020.

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

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

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

PART I - FINANCIAL INFORMATION

Item 1.		Financial Statements	2
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	4445
Item 4.		Controls and Procedures	4546

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings		4647
Item 1A.	Risk Factors		4647
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		4650
Item 3.	Defaults Upon Senior Securities		4650
Item 4.	Mine Safety Disclosures		4650
Item 5.	Other Information		4650
Item 6.	Exhibits		4751
	Signatures		4852

($ in millions)
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating leases	$	8
Right-of-use assets obtained in exchange for new operating lease liabilities		1
Weighted-average remaining lease term of operating leases	6.6 years
Weighted-average discount rate of operating leases		5.33	%


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

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

($ in millions)	Operating Leases ⁽¹⁾
Year
2019 (remaining)	$	8
2020		16
2021		15
2022		10
2023		10
Thereafter		32
Total future minimum lease payments	$	91
Less: interest		(15	)
Present value of lease liabilities	$	76

Expected volatility	~~33.1~~35.4	%
Dividend yield	—	%
Risk-free rate	~~2.6~~1.0	%
Expected term (in years)	6.0

($ in millions)	Purchase Obligations
Year
2019 (remaining)	$	38
2020		220
2021		87
2022		57
2023		54
Thereafter		55
Total	$	511

($ in millions)	2020 (remaining)		2021		2022		2023		2024		Thereafter		Total
Inventory purchase obligations	$	26	$	225	$	110	$	58	$	40	$	14	$	473
Other commitments⁽¹⁾		14		11		1		—		—		—		26
Total	$	40	$	236	$	111	$	58	$	40	$	14	$	499

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Appropriate Dollar Value of Shares that May Yet Be Purchased Under Plan
April 1 - April 30, 2019		925,199	$	32.55		925,199	$	201,475,009
May 1 - May 31, 2019		941,000		28.52		941,000		174,633,868
June 1 - June 30, 2019		4,001,216		29.37		4,001,216		57,121,193
Total		5,867,415	$	29.74		5,867,415	$	57,121,193

Exhibit No.		Description

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

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

~~3.3~~		Second Supplemental Indenture, dated as of May 29, 2019, by and among the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee, to the Indenture, dated as of October 24, 2016, by and among Hilton Grand Vacations Borrower LLC, as the issuer, Hilton Grand Vacations Borrower Inc., as the co-issuer, the guarantors party thereto from time to time, and Wilmington Trust, National Association, as trustee. *

10.1		Joinder Agreement, dated as of April 9, 2019, by and among subsidiary guarantors party thereto and Bank of America N.A., as administrative agent and collateral agent, related to the Credit Agreement, dated as of December 28, 2016, as amended by Amendment No. 1 to the Credit Agreement, dated as of November 28, 2018, by and among Hilton Grand Vacations Borrower LLC, Hilton Grand Vacations Parent LLC, the other guarantors party thereto from time to time, the other lender parties thereto, and Bank of America, N.A., as successor administrative agent, collateral agent, L/C issuer and swing line lender.*

~~10.2~~		Omnibus Amendment No. 1113 to Receivables Loan Agreement, ~~and Amendment No. 5 to Sale and Contribution Agreement,~~ effective as of ~~April 25, 2019,~~January 17, 2020, by and among Hilton Grand Vacations Trust I LLC, as borrower, Hilton Resorts Corporation, the financial institutions signatory thereto as managing agents, the financial institutions signatory thereto as conduit lenders, the financial institutions signatory thereto as committed lenders, ~~and~~ Bank of America, N.A., as administrative agent, and ~~structuring~~Wells Fargo Bank, National Association, as securities intermediary and paying agent.*

10.2		Form of Second Amended and Restated Performance and Service Based Restricted Stock Unit Agreement under the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (for use for all named executive officers other than Mr. Mark Wang) (2018 Awards).* +

10.3		Form of Second Amended and Restated Performance and Service Based Restricted Stock Unit Agreement for Mr. Mark Wang under the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan (2018 Awards).* +

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

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

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

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

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

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

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

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

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	HILTON GRAND VACATIONS INC.

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

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