WYN-2014.12.31-10K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)


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

For the fiscal year ended December 31, 2014


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

For the transition period from to

COMMISSION FILE NO. 001-32876

WYNDHAM WORLDWIDE CORPORATION

(Exact name of registrant as specified in its charter)



DELAWARE		20-0052541
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

22 SYLVAN WAY		07054
PARSIPPANY, NEW JERSEY		(Zip Code)
(Address of principal executive offices)

(973) 753-6000

(Registrant’s telephone number, including area code)

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



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

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

None

(Title of Class)

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

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

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

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

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



Large accelerated filer	þ	Accelerated filer	¨	Non-accelerated filer	¨	Smaller reporting company	¨
				(Do not check if a smaller reporting company)

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

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 30, 2014, was $9,402,262,649. All executive officers and directors of the registrant have been deemed, solely for the purpose of the foregoing calculation, to be “affiliates” of the registrant.

As of January 31, 2015, the registrant had outstanding 120,558,066 shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement prepared for the 2015 Annual Meeting of Shareholders are incorporated by reference into Part III of this report.

Table of Contents

TABLE OF CONTENTS



		Page
	PART I
Item 1.	Business	2
Item 1A.	Risk Factors	23
Item 1B.	Unresolved Staff Comments	31
Item 2.	Properties	31
Item 3.	Legal Proceedings	32
Item 4.	Mine Safety Disclosures	32
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	33
Item 6.	Selected Financial Data	35
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	62
Item 8.	Financial Statements and Supplementary Data	64
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	64
Item 9A.	Controls and Procedures	64
Item 9B.	Other Information	64
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	65
Item 11.	Executive Compensation	66
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	66
Item 13.	Certain Relationships and Related Transactions, and Director Independence	66
Item 14.	Principal Accounting Fees and Services	66
	PART IV
Item 15.	Exhibits and Financial Statement Schedules	67
	Signatures	68

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PART I

Forward Looking Statements

This report includes “forward-looking” statements, as that term is defined by the Securities and Exchange Commission (“SEC”) in its rules, regulations and releases. Forward-looking statements are any statements other than statements of historical fact including statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases forward-looking statements can be identified by the use of words such as “may,” “expects,” “should,” “believes,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” “continue” or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in or implied by the forward-looking statements. Factors that might cause such a difference include but are not limited to general economic conditions, our financial and business prospects, our capital requirements, our financing prospects, our relationships with associates and those disclosed as risks under “Risk Factors” in Part I, Item 1A of this report. We caution readers that any such statements are based on currently available operational, financial and competitive information and they should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made. Except as required by law, we disclaim any obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.

Where You Can Find More Information

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

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

ITEM 1. BUSINESS

OVERVIEW

Wyndham Worldwide

As one of the world’s largest hospitality companies, we offer individual consumers and business customers a wide range of hospitality services and products through our global portfolio of world-renowned brands. The hospitality industry is a major component of the travel industry, which is one of the largest retail industry segments of the global economy. Through our 25 primary brands, we have built a significant presence in most major hospitality markets in the United States and throughout the world. Our brands include: Wyndham Hotels and Resorts, Ramada, Days Inn, Super 8, Howard Johnson, Wingate by Wyndham, Microtel Inns & Suites, Tryp by Wyndham, RCI, Landal GreenParks, Novasol, Hoseasons, cottages4you, James Villa Holidays, Wyndham Vacation Rentals, Wyndham Vacation Resorts, Shell Vacations Club and WorldMark by Wyndham. Our operations are grouped into three segments: lodging, vacation exchange and rentals and vacation ownership.

•

Wyndham Hotel Group is the world’s largest hotel company based on the number of properties, with 7,645 hotels and over 660,800 hotel rooms worldwide. We franchise in the upscale, upper midscale, midscale, economy and extended stay segments with a concentration in economy brands. We also provide property management services for full-service and select limited-service hotels. This is predominantly a fee-for-service business that produces recurring revenue streams with steady cash flow and low capital investment requirements.

•

Wyndham Exchange and Rentals includes the world’s largest vacation exchange network based on the number of members (3.8 million) and affiliated vacation ownership resorts (approximately 4,500) providing vacation exchange services and products to timeshare developers and owners. We are also the world’s largest professional manager of vacation rental properties based on the number of properties (approximately 103,000), which we market on behalf of independent owners. In total, we provide access to over 107,000 vacation properties in more than 100 countries, including vacation ownership condominiums, traditional hotel rooms, villas, cottages, chalets, city apartments, second homes, fractional resorts, private residence clubs and yachts. This is primarily a fee-for-service business that provides stable revenue streams and produces strong cash flow.

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•

Wyndham Vacation Ownership is the world’s largest timeshare (also known as vacation ownership) business based on the number of resorts, units, owners and revenues, with 203 resorts and approximately 904,000 owners. We develop and market Vacation Ownership Interests (“VOIs”) to individual consumers, provide consumer financing in connection with the sale of VOIs and provide property management services at resorts.

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

How we create value for our shareholders

Our mission is to increase shareholder value by being the leader in travel accommodations and welcoming our guests to iconic brands and vacation destinations through our signature “Count On Me!” service. Our strategies to achieve these objectives are to:


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


•	Increase cash flow and profit through superior execution;


•	Develop innovative services and products to meet the evolving needs of customers;


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


•	Support and promote Wyndham Green and Wyndham Diversity initiatives.

We provide value-added services and products intended to enhance the travel experience of the individual consumer and to drive revenues to our business customers. We have a strong presence in many different segments of the hospitality industry. This allows us to leverage our relationships with our existing customers by offering them services and products from other segments.

All of our businesses have both domestic and international operations. During 2014, we derived 74% of our revenues in the U.S. and 26% internationally (approximately 16% in Europe and 10% in all other international regions). For a discussion of our segment revenues, profits, assets and geographical operations, see Note 21 to the Consolidated Financial Statements included in this Annual Report.

History and Development

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

We have many widely recognized and well-established brands. Our Howard Johnson and Ramada brands opened their first hotels in 1954. RCI, our vacation exchange business, was established in 1974. Hoseasons, Landal GreenParks and Novasol, some of Europe’s most renowned vacation rental brands, were established in 1944, 1954 and 1968, respectively. Our vacation ownership brands began operations in 1978 with Shell Vacations Club, followed by Wyndham Vacation Resorts (formally known as Fairfield Resorts) in 1980 and WorldMark by Wyndham (formally known as Trendwest Resorts) in 1989.

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



1990	1992	1993	1996
Howard Johnson	Days Inn	Super 8	Resort Condominiums International (RCI)
Ramada (US)			Travelodge North America
2001	2002	2004	2005
Wyndham Vacation Resorts	WorldMark by Wyndham	Landal GreenParks	Wyndham Hotels and Resorts
Holiday Cottages Group	Novasol	Ramada International
Cuendet
2006	2008	2010	2012
Baymont Inn and Suites	Microtel Inns and Suites	Hoseasons	Shell Vacations Club
	Hawthorn Suites	ResortQuest	Smoky Mountain Property Management
		James Villa Holidays	Oceana Resorts
		Tryp

BUSINESS DESCRIPTIONS

The following is a description of each of our three business units, Wyndham Hotel Group, Wyndham Exchange & Rentals and Wyndham Vacation Ownership, and the industries in which they compete.

WYNDHAM HOTEL GROUP

Lodging Industry

Regions

The global lodging market consists of approximately 165,000 hotels with combined annual revenues of approximately $467 billion. This represents nearly 15.5 million rooms, of which approximately 53% are affiliated with a brand. The market is geographically concentrated with the top 20 countries accounting for over 80% of total rooms.

The regional distribution of the lodging industry consists of the following (according to Smith Travel Research Global (“STR”)):



		Room Supply	Revenues		Brand
Region	Hotels	(millions)	(billions)		Affiliation
United States/Canada	59,600	5.3	$	145	68	%
Europe	60,000	4.5	156		41	%
Asia Pacific	30,000	3.8	109		51	%
Latin America/Middle East	15,100	1.9	57		43	%

Business Models

Companies in the lodging industry operate primarily under one of the following business models:

•

Franchise - Under the franchise model, a company typically grants the use of a brand name to a hotel owner in exchange for royalty fees that are typically a percentage of room sales. Since the royalty fees are a recurring revenue stream and the cost structure is relatively low, the franchise model yields high margins and steady, predictable cash flows. As of December 31, 2014, we had 7,585 franchised properties in our hotel portfolio.

•

Management - Under the management model, a company provides professional oversight and comprehensive operations support to hotel owners in exchange for base management fees that are typically a percentage of hotel revenue. A company can also earn incentive management fees which are tied to the financial performance of the hotel. As of December 31, 2014, we had 58 managed properties in our hotel portfolio.


•	Ownership - Under the ownership model, a company owns hotels and bears all financial risks and rewards relating to the hotel, including appreciation and depreciation in the value of the property. As of December 31, 2014, we had two owned hotels in our portfolio.

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Revenue Metrics

Performance in the lodging industry is measured by the following key metrics:


•	Average daily rate, or ADR - ADR is defined as total revenue divided by the number of room nights sold. It represents the average price of a room at a hotel or group of hotels.


•	Average occupancy - Occupancy is the number of room nights sold divided by the total number of rooms. Average occupancy allows us to gauge demand.


•	Revenue per available room, or RevPAR - RevPAR is calculated by multiplying ADR by the average occupancy rate; it is the average price of a room multiplied by the percentage of rooms occupied. RevPAR is the primary metric used by our management to track the performance of our hotels, and it allows us to compare performance across regions, segments, and brands.


•	System growth - System growth is calculated by subtracting room terminations from gross room openings, and provides a measure for the number of rooms added to our portfolio.

The U.S. is the most dominant country in the global lodging market with over 28% of global room revenues. The following table displays trends in the key revenue metrics for the U.S. lodging industry over the last six years and for 2015 (estimate):



Year	Occupancy	ADR		RevPAR*
2009	54.6%	$	98.16	$	53.55
2010	57.5%	98.21		56.46
2011	59.9%	101.93		61.04
2012	61.3%	106.21		65.08
2013	62.1%	110.42		68.60
2014	64.4%	115.45		74.31
2015 Estimate	65.1%	122.66		79.80

* RevPAR may not recalculate by multiplying occupancy by ADR due to rounding.

Sources: STR (2009 to 2014); PricewaterhouseCoopers (“PwC”) (2015). 2015 estimated data is as of January 2015.

The U.S. lodging industry experienced positive RevPAR performance over the prior year primarily resulting from demand growth and gains in ADR. U.S. occupancy grew by 3.6% to 64.4% in 2014. This growth was driven by strong momentum in both transient and group demand. During 2014, ADR grew 4.6% to $115.45. As a result of the occupancy and ADR gains, the U.S. lodging industry experienced RevPAR growth of 8.3% in 2014.

According to PwC’s most recent outlook on the Hospitality and Leisure Industry, the strong momentum exhibited in 2014 in transient and group demand is expected to continue in 2015, resulting in an increase in pricing power for hotels. Industry occupancy is expected to reach levels that have not been seen since 1984. It is expected that growth in U.S. hotel demand, as measured by room night consumption, is expected to exceed growth in supply again in 2015. Occupancy and ADR gains are expected across all segments resulting in an overall RevPAR increase of 7.4%. Certain industry experts project RevPAR in the U.S. to grow at a 3.2% compounded annual growth rate from 2016 to 2018.

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Segment Descriptions

Performance in the U.S. lodging industry is evaluated based upon chain scale segments, which are generally defined as follows:


•	Luxury - typically offers first class accommodations and an extensive range of on-property amenities and services, including restaurants, spas, recreational facilities, business centers, concierges, room service and local transportation (shuttle service to airport and/or local attractions). ADR is normally greater than $210 for hotels in this category.


•	Upper Upscale - typically offers accommodations with a full range of on-property amenities and services, including restaurants, spas, recreational facilities, business centers, concierges, room service and local transportation (shuttle service to airport and/or local attractions). ADR normally falls in the range of $145 to $210 for hotels in this category.


•	Upscale - typically offers a full range of on-property amenities and services, including restaurants, spas, recreational facilities, business centers, concierges, room service, and local transportation (shuttle service to airport and/or local attractions). ADR normally falls in the range of $110 to $145 for hotels in this category.


•	Upper Midscale - typically offers restaurants, vending, selected business services, partial recreational facilities (either a pool or fitness equipment), and limited transportation (airport shuttle). ADR normally falls in the range of $90 to $110 for hotels in this category.


•	Midscale - typically offers limited breakfast, selected business services, limited recreational facilities (either a pool or fitness equipment), and limited transportation (airport shuttle). ADR normally falls in the range of $65 to $90 for hotels in this category.


•	Economy - typically offers basic amenities and a limited breakfast. ADR is normally less than $65 for hotels in this category.

Wyndham Hotel Group Overview

Wyndham Hotel Group is the world’s largest hotel franchisor based on number of properties, with 7,585 franchised hotels and over 660,800 hotel rooms worldwide, and is a leader in the economy segment. Our franchise business is easily adaptable to changing economic environments due to low operating cost structures. This, in combination with recurring fee streams, yields high margins and predictable cash flows. Ongoing capital requirements are relatively low and mostly limited to technology expenditures which support core capabilities. We may employ incentives to generate new business, such as key money, development advance notes, and other forms of financial support to assist franchisees and hotel owners in converting to one of our brands or building new hotels under a Wyndham Hotel Group brand.

Our owned hotel portfolio currently consists of the Wyndham Grand Rio Mar Beach Resort and Spa in Puerto Rico (“Rio Mar hotel”) and the Wyndham Grand Orlando Bonnet Creek (“Bonnet Creek hotel”). Both hotels represent mixed-use opportunities which allow us to introduce our hotel guests to the vacation ownership product.

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The following table provides operating statistics for each brand in our system as of and for the year ended December 31, 2014:



Brand	Primary Segment ^(*)	Total Hotels	Rooms
Brand	Primary Segment ^(*)	Total Hotels	Total	North America ⁽¹⁾	Latin America	EMEA	Asia/Pacific	RevPAR
	Economy	2,510	160,847	110,623	150	57	50,017	$	29.09
	Economy	1,794	145,078	126,750	286	4,492	13,550	33.48
	Midscale	837	115,923	57,913	3,030	30,097	24,883	43.22
	Economy	429	45,919	27,885	3,067	528	14,439	30.96
	Upscale	195	43,865	25,929	5,740	6,444	5,752	71.14
	Economy	421	30,989	30,989	—	—	—	34.62
	Midscale	369	29,727	29,727	—	—	—	34.51
	Economy	398	24,832	24,832	—	—	—	20.94
	Economy	323	23,138	21,751	463	—	924	40.23
	Upper Midscale	119	16,965	486	3,160	13,254	65	55.97
	Midscale	153	13,923	13,747	176	—	—	55.05
	Midscale	97	9,620	9,286	—	334	—	50.19
Total		7,645	660,826	479,918	16,072	55,206	109,630	$	37.57


^(*)	This reflects the primary chain scale segments served using the STR Global definition and method as of December 2014. STR Global is U.S. centric and categorizes a hotel chain, or brand, based on ADR in the U.S. We utilized these chain scale segments to classify our brands both in the U.S. and internationally.


⁽¹⁾	Comprised of U.S., Canada and Puerto Rico.

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The following table depicts our geographic distribution and key operating metrics by region:



	# of	# of
Region	Properties	Rooms	Occupancy		ADR		RevPAR*
United States ⁽¹⁾	5,646	440,175	53.1	%	$	70.22	$	37.27
Canada	505	39,743	55.2	%	92.90		51.26
Europe/Middle East/Africa	402	55,206	62.3	%	83.46		51.99
Asia/Pacific ⁽²⁾	960	109,630	56.2	%	44.44		24.98
Latin America	132	16,072	56.0	%	79.69		44.60
Total	7,645	660,826	54.5	%	68.94		37.57


*	RevPAR may not recalculate by multiplying occupancy by ADR due to rounding.


⁽¹⁾	Includes properties located in Puerto Rico.


⁽²⁾	China represents 88% of the total region with the majority of our hotels in China being under master franchise agreements.

The number of lodging properties and rooms in operation by market sector is as follows:



	As of December 31,
	2014		2013		2012
	Properties	Rooms	Properties	Rooms	Properties	Rooms
Economy ^(a)	5,755	410,752	5,646	401,665	5,578	398,304
Midscale ^(b)	1,237	130,234	1,187	124,688	1,208	125,900
Upper Midscale ^(c)	543	89,710	543	89,576	469	79,274
Upscale ^(d)	110	30,130	104	28,505	82	22,969
Upper Upscale ^(e)	—	—	5	989	5	990
Total	7,645	660,826	7,485	645,423	7,342	627,437

These chain scale segments are utilized to classify our brands in the North America region. For illustrative purposes, we also reflected our international properties and rooms under these categories.


^(a)	Comprised of the Days Inn, Super 8, Howard Johnson Inn, Howard Johnson Express, Travelodge, Microtel Inn & Suites by Wyndham and Knights Inn brands.


^(b)	Primarily includes the Wingate by Wyndham, Hawthorn Suites by Wyndham, Ramada Inn, Ramada Limited, Howard Johnson Plaza, Howard Johnson Hotel and Baymont Inn & Suites brands.


^(c)	Primarily includes the Ramada Hotels, Ramada Plaza, Tryp by Wyndham and Wyndham Garden Hotel brands.


^(d)	Comprised of the Wyndham Hotels and Resorts brand.


^(e)	Comprised of the Dream brand for 2013 and 2012.

The number of lodging properties and rooms changed as follows:



	As of December 31,
	2014				2013				2012
	Properties		Rooms		Properties		Rooms		Properties		Rooms
Beginning balance	7,485		645,423		7,342		627,437		7,205		613,126
Additions	619		61,657		633		65,933		688		66,050
Terminations	(459	)	(46,254	)	(490	)	(47,947	)	(551	)	(51,739	)
Ending balance	7,645		660,826		7,485		645,423		7,342		627,437

In our franchising business, we seek to generate revenues for our hotel owners through our strong, well-known brands and the delivery of services such as marketing, information technology, revenue management, training, operations support, strategic sourcing and guest services.

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The sources of our revenues from franchising hotels include (i) ongoing franchise fees, which are comprised of royalty, marketing and reservation fees, (ii) initial franchise fees which relate to services provided to assist a franchised hotel to open for business under one of our brands and (iii) other service fees. Royalty fees are intended to cover the use of our trademarks. Marketing and reservation fees are intended to reimburse us for expenses associated with operating reservations systems, e-commerce channels including our brand.com websites and access to third-party distribution channels, such as online travel agents (“OTAs”), advertising and marketing programs, global sales efforts, operations support, training and other related services. Other service fees include fees derived from providing ancillary services, and are generally intended to reimburse us for direct expenses associated with providing these services.

Our management business offers hotel owners the benefits of a global brand and a full range of management, marketing and reservation services. In addition to the standard franchise services, our hotel management business provides hotel owners with professional oversight and comprehensive operations support, including hiring, training and supervising the hotel managers and employees, annual budget preparation, local sales and marketing efforts, financial analysis, and food and beverage services. Revenues earned from our management business include management and service fees. Management fees are comprised of (i) base fees, which are typically a specified percentage of gross revenues from hotel operations, and potentially (ii) incentive fees, which are typically a specified percentage of a hotel’s gross operating profit. Service fees include fees derived from accounting, design, construction and purchasing services and technical assistance provided to managed hotels. We are also required to recognize fees relating to reimbursable payroll costs for operational employees who work at some of our managed hotels as revenue. Although these costs are funded by hotel owners, accounting guidance requires us to report these fees on a gross basis as both revenues and expenses. As such, there is no effect on our operating income.

Our ownership portfolio is limited to two hotels in locations where we have developed or intend to develop timeshare units. Revenues earned from our owned hotels are comprised of (i) gross room nights, (ii) food and beverage services, and (iii) on-site spa, casino, golf and shop revenues. We are responsible for all operations and recognize all revenues and expenses associated with the hotels.

We also earn revenues from the Wyndham Rewards loyalty program when a member stays at a participating hotel. Revenues are derived from a fee we charge based upon a percentage of room revenues generated from such member stays. These fees are intended to reimburse us for expenses associated with administering and marketing the loyalty program.

Reservation Booking Channels

A majority of our economy and midscale hotels are located on highway roadsides for convenience of travelers; therefore, a significant portion of room nights sold are on a walk in or direct to hotel basis. We believe their choice of hotel is attributable to the reputation and general recognition of our brand names.

Another significant component of our value proposition to a hotel owner is access to our reservation booking channels, which we also refer to as our distribution platform. These channels include our proprietary brand web and mobile sites, our mobile apps, our call center facilities, our Wyndham Rewards loyalty program, our global sales team, global distribution partners such as Sabre and Amadeus, OTAs and other third-party internet referral or booking sources, such as Kayak, TripAdvisor and Google. Over half of our reservation delivery comes from online sources, including our proprietary and mobile websites.

For guests who choose to book their hotel stay in advance through our distribution platform, we booked a total of 53 million room nights in 2014 on behalf of hotels within our system (including all bookings under our global sales agreements). This represents 41% of total bookings at these hotels, up 10% from last year.

A key strategy for reservation delivery is the continual investment in our e-commerce capabilities (websites, mobile and other online channels), as well as the deployment of advertising spend to drive online traffic to our proprietary e-commerce channels. This strategy also encompasses marketing agreements we have with travel related search websites and affiliate networks, and other initiatives to drive business directly to our online channels. In addition, to ensure our franchisees receive bookings from OTAs and other third-party internet sources, we provide direct connections between our central reservations system and strategic third-party internet booking sources. These direct connections allow us to deliver more accurate and consistent rates and inventory, send bookings directly to our central reservation systems without interference or delay and reduce our franchisee distribution costs.

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Loyalty Program

Building a robust loyalty program is critical to delivering our value proposition to our hotel owners, and we have embarked on a multi-year plan to enhance our program. The Wyndham Rewards program was introduced in 2003 and has grown steadily since its inception. The diversity of our brands and significant footprint uniquely enables us to meet our members’ leisure and business travel needs across a variety of locations, and a wide range of price points. Over 39 million members in 70 countries have enrolled in the program since its inception. These members stay at our brands more frequently and drive incremental room nights, higher ADR and a longer length of stay than non-members. On an annualized basis, a Wyndham Rewards member spends 70% more than a non-member.

Wyndham Rewards is the largest lodging loyalty program as measured by number of participating hotels in the lodging industry. Members earn points by staying in one of our participating branded hotels or by purchasing everyday services and products using a co-branded Wyndham Rewards credit card. The points may be redeemed for a variety of reward options, including airline travel, resort vacations, event tickets, gift certificates for leading retailers and restaurants, and more. During 2014, 74% of all points redeemed were for free nights, a 39% increase over prior years. This demonstrates the impact of the program in driving additional stays to our hotel owners.

Marketing, Sales and Revenue Management Services

Our brand and field marketing teams develop and implement global marketing strategies for each of our hotel brands. While brand positioning and strategy is generated from our U.S. headquarters, we have seasoned marketing professionals positioned around the globe to modify and implement these strategies on a local market level. Our marketing efforts communicate the unique value proposition of each of our individual brands, and are designed to build consumer awareness and drive business to our hotels, either directly or through our own reservation channels.

We deploy a variety of marketing strategies and tactics depending on the needs of the specific brand and local market, including online advertising, social media marketing, traditional media planning and buying (radio, television and print), creative development, promotions, sponsorships and highly targeted direct marketing. In May 2014, we launched an umbrella marketing strategy which featured all 12 of our brands on television and in other forms of media, with a goal of driving more consumers to our proprietary websites and into our loyalty program. Our Best Available Rate guarantee gives consumers confidence to book directly with us by guaranteeing the same rates regardless of whether they book through our call centers, websites or other third-party channels. In addition, we leverage the strength of our Wyndham Rewards loyalty program to develop meaningful marketing promotions and campaigns to drive new and repeat business to hotels in our system. Our Wyndham Rewards marketing efforts drive tens of millions of consumer impressions through the program’s channels and its partners’ channels.

Our global sales organization leverages the size and diversification of our portfolio to gain a larger share of business for each of our hotels through relationship-based selling to a broad range of hotel guests. With over 7,640 hotels throughout the world, we are able to find more complete solutions for a client/company whose travel needs range from economy to upscale brands. In order to leverage multidimensional customer needs for our hotels, the sales team is deployed globally in key markets within Europe, Mexico, Canada, Latin America, China, Hong Kong, the Middle East and the U.S.

We also offer revenue management subscription services, with professionals deployed in key markets globally, to help maximize the revenues of our franchisees by advising them on strategies for their consideration intended to optimize rate and inventory management. These services also coordinate all recommended revenue programs delivered to our franchisees in tandem with e-commerce and brand marketing strategies.

Property Services

Our worldwide teams of industry veterans continually collaborate with franchisees on all aspects of their operations, and create detailed and individualized strategies for success. We are able to make meaningful contributions to hotel operations, which result in higher profits for our hotel owners by providing key services including system integration, operations support, training, strategic sourcing, and development planning and construction.

We also provide hotel owners with property management system software that synchronizes each hotel’s inventory with our central reservations platform. These systems assist franchisees with managing their room inventory (room nights), rates (ADR) and reservations, which leads to greater profits for our hotel owners and enhances our ability to deliver reservations at the right price to guests for our hotel owners.

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Beginning in 2015, we intend to provide cloud-based Software-as-a-Service reservations and revenue management services to our properties. This solution will offer hotel owners an integrated and automated revenue management system that will optimize rates, occupancy, and RevPAR to grow market share.

New Property Development

Our development team consists of nearly 90 professionals in locations throughout the world, including the U.S., China, Mexico, India, Europe, Australia, and the Middle East. Our development team is focused on growing our franchise business and their efforts typically target existing franchisees as well as hotel developers, owners of independent hotels and owners of hotels leaving competitor brands. Approximately 44% of the new rooms added in 2014 were with our existing franchisees or managed hotel owners.

In addition, our development team is focused on growing our management business. Our hotel management business gives us access to development opportunities beyond pure play franchising transactions. When a hotel owner is seeking both a brand and a manager, we are able to couple these services into one offering which we believe gives us a competitive advantage. Over the past 3 years, we have focused on portfolio deals and grew our managed portfolio from 24 hotels as of December 31, 2011 to 60 hotels as of December 31, 2014.

The number of lodging properties and rooms in our pipeline as of December 31, 2014 is as follows:



	Domestic			International			Total
	Properties	Rooms		Properties	Rooms		Properties	Rooms	%
Conversions	317	31,113		91	10,793		408	41,906	36	%
New Construction	200	18,851		351	56,017		551	74,868	64	%
Total	517	49,964		442	66,810		959	116,774
% of Total		43	%		57	%

During 2014, 73% of our room additions were conversions from either an unbranded hotel or a non-Wyndham Hotel Group brand. Many of these hotels are excluded from our pipeline statistics as the period from signing the contract to flagging the hotel often occurs within the quarter.

In North America, we generally employ a direct franchise model whereby we contract with and provide various services directly to hotel owners. Under our direct franchise model, we principally market our lodging brands to hotel developers, owners of independent hotels, and hotel owners who have the right to terminate their existing franchise affiliations with other lodging brands. We also market franchises to existing franchisees since many own, or may own in the future, other hotels that can be converted to one of our brands. Our standard franchise agreement grants a franchisee the right to non-exclusive use of the applicable franchise system in the operation of a single hotel at a specified location, typically for a period of 15 to 20 years. It also gives the franchisor and franchisee certain rights to terminate the franchise agreement before its end date under certain circumstances, such as upon the lapse of a certain number of years after commencement of the agreement. Early termination options in these agreements give us the flexibility to terminate franchised hotels if business circumstances warrant. We also have the right to terminate a franchise agreement for failure by a franchisee to bring its property into compliance with contractual or quality standards within specified periods of time, pay required franchise fees or comply with other requirements of the agreement.

While we generally employ a direct franchise model in North America, we currently have two company-owned hotels. The Bonnet Creek hotel, which is situated in our Bonnet Creek vacation ownership resort near the Walt Disney World resort in Florida, enables us to leverage the synergies of our company’s hotel and vacation ownership elements. The Rio Mar hotel, which is located in Rio Grande, Puerto Rico, is a luxury oceanfront property that includes premier restaurants, a spa, casino, golf course, and comprehensive business center. We also hold land at this location for future vacation ownership development. As such, these two hotels provide us with mixed-use opportunities that allow us to generate cross product interest by exposing our hotel guests to the vacation ownership product. Additionally, under our mixed-use business model, we are able to provide our hotel guests and VOI owners with higher quality amenities.

In other parts of the world, we employ both a direct franchise and master franchise model. We generally employ a master franchise model in regions where we are not yet ready to support the required infrastructure for a specific region. For example, while we employ a direct franchising model in China for our Wyndham and Ramada brands, we use a master franchise model for our Super 8, Days Inn and Howard Johnson brands. Similarly, within Canada, we generally employ a

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direct franchising model for our brands with the exception of our Days Inn and Travelodge brands, for which we use a master license model.

Franchise agreements in regions outside of North America may carry a lower fee structure based on the services we are prepared to provide in that particular region. Under our master franchise model we typically market our lodging brands to third parties that assume the principal role of franchisor, which involves selling individual franchise agreements and providing quality assurance, marketing assistance, and reservations support to franchisees. Since we provide only limited services to master franchisors, the fees we receive in connection with these agreements are typically lower than the fees we receive under a direct franchising model. Master franchise agreements, which are individually negotiated and vary among our brands, typically contain provisions that permit us to terminate the agreement if the other party fails to meet specified development schedules.

Strategies

We are strategically focused on leveraging our strength to deliver an enhanced value proposition to our franchisees and owners, and to create long-term shareholder value.

We expect to deploy the following tactics in pursuit of these goals:


•	grow our iconic brands globally;


•	deliver value-added operational support that improves hotel performance;


•	expand and enhance our Wyndham Rewards loyalty program;


•	align connectivity, systems and support to increase contribution for our franchisees; and


•	increase marketing effectiveness and scale to drive revenue.

Seasonality

Franchise and management fees are generally higher in the second and third quarters than in the first or fourth quarters of any calendar year. This is due to increased leisure travel and the related ability to charge higher ADRs during these months.

Competition

Competition is robust among the lodging brand franchisors to grow their franchise systems and retain their existing franchisees. We believe franchisees make decisions based principally upon the perceived value and quality of the brand and the services offered. We further believe that the perceived value of a brand name is partially a function of the success of the existing hotels franchised under the brand.

The ability of an individual franchisee to compete may be affected by the location and quality of its property, the number of competitors in the vicinity, community reputation and other factors. A franchisee’s success may also be affected by general, regional and local economic conditions. The potential negative effect of these conditions on our performance is substantially reduced by virtue of the diverse locations of our franchised hotels and by the scale of our franchisee base. Our franchise system is dispersed among approximately 5,495 franchisees, which reduces our exposure from any one franchisee. No one franchisee accounts for more than 9% of our franchised hotels or total segment revenues.

WYNDHAM EXCHANGE & RENTALS

Vacation Exchange and Rentals Industries

The vacation exchange and rentals industries offer leisure travelers access to a range of unique, non-traditional lodging accommodations, such as privately-owned vacation homes, villas, cottages, apartments, condominiums and vacation ownership resorts, as well as flexibility in time of travel and lodging options.

Vacation exchange is a fee-for-service business that offers services and products to timeshare developers and owners. To participate in a vacation exchange, a timeshare owner provides his or her interval to an exchange company’s network and receives the opportunity to use another owner’s interval at a different location. The exchange company assigns a value to the owner’s interval based upon a number of factors, including location and size of the timeshare unit, dates of the interval, and the amenities at the resort. Exchange companies generally derive revenues by charging fees for facilitating exchanges and through annual membership dues. In 2013, 30% of global timeshare owners (or 6.0 million) were vacation exchange members and they completed approximately 2.9 million exchanges.

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Timeshare private label clubs, such as Club Wyndham, WorldMark by Wyndham and Disney Vacation Club, give members the option to exchange both internally or through external exchange channels. Private label clubs have been the largest driver of timeshare industry growth over the past several years. This long term trend has a positive impact on the average number of members, but a negative effect on the number of exchange transactions per member and revenue per member as members exchange more within their private label club.

The over $80 billion global vacation rentals industry is largely a fee-for-service business that offers vacation property owners the opportunity to rent their properties to leisure travelers. The industry is broadly divided into two segments. The first is the professionally managed rental segment, where the homeowner provides their property to an agent to rent, generally on an exclusive basis, and pays the agent a commission for marketing the property, managing bookings and providing quality assurance to the renter. The agent may also offer services such as daily housekeeping, on-site check-in, in-unit maintenance, and in-room guest amenities. The other segment of the industry is the rent-by-owner model where the property owner pays a fixed fee for an online listing or a minimal commission percentage for each booking. The agreement to list the owner’s property is usually not exclusive and typically includes minimal additional services. The rent-by-owner segment generally does not offer any quality assurance or direct booking ability for renters, and any fixed listing fee is usually charged regardless of whether the unit is rented. Conversely, professionally managed vacation rental companies collect rent in advance and generally offer accounting, housekeeping, maintenance and other services. After deducting the applicable commissions, professional managers remit the net amount due to the property owners. In addition to commissions, professionally managed vacation rental companies may earn revenues from rental customers through fees that are incidental to the rental of the properties, such as for travel services, local transportation, on-site services and insurance or similar types of products.

The global supply of vacation rental inventory is less organized than the lodging industry and is highly fragmented with much of it being made available by individual property owners. We believe that as of December 31, 2014, there were approximately 1.3 million properties in the U.S. and 4.3 million properties in Europe available for vacation rentals. In the U.S., vacation properties available for rental are primarily condominiums or stand-alone houses, whereas in Europe, rental offerings are more diverse, including individual homes, apartments and holiday park chalets.

The global demand for vacation rentals is approximately 76 million vacation weeks per year, 57 million of which are rented by leisure travelers in Europe. We believe this demand has been growing for the following reasons: (i) the consumer value of renting a unit for an entire family, (ii) the increased use of the internet as a tool for facilitating vacation rental transactions and (iii) increased consumer awareness of vacation rental options. Demand for vacation rental properties is often regional since many leisure travelers rent properties within driving distance of their home.

Wyndham Exchange & Rentals Overview

Wyndham Exchange & Rentals connects vacation suppliers, including timeshare affiliates, individual homeowners, and vacation park operators with vacationers. Our mission is to send people on the vacation of their dreams. We have a diverse portfolio of trusted brands to meet the needs of virtually every traveler. Through our industry-leading tools, expertise and brands, we bring outstanding value to both suppliers and guests to maximize supplier utilization and guest experience. We have the world’s largest vacation exchange network based on the number of members and affiliated vacation ownership resorts, and are the world’s largest professional manager of vacation rental properties based on the number of professionally managed properties. We are largely a fee-for-service business with strong and predictable cash flows.

Our vacation exchange business, RCI, derives a majority of its revenues from annual membership dues and fees for facilitating exchanges. Our vacation exchange business also derives revenues from ancillary services including additional services provided to transacting members, programs with affiliated resorts, club servicing and loyalty programs.

Our vacation rentals business, Wyndham Vacation Rentals, primarily derives its revenues from fees, which generally average between 20% and 50% of the gross booking fees. For properties which we own, manage or operate under long-term capital and operating leases (which represent less than 10% of our portfolio), we receive 100% of the revenues. Our vacation rentals business also derives revenues from ancillary services delivered to property owners, vacation rental guests and homeowner associations.

Our vacation exchange and rentals business has access to over 107,000 unique, non-traditional vacation properties in more than 100 countries for specified periods, predominantly on an exclusive basis. Each year, our vacation exchange and rentals business provides more than 5 million families with vacation exchange and rentals services and products. The properties available to travelers include vacation ownership condominiums, traditional hotel rooms, villas, cottages, chalets, city apartments, second homes, fractional resorts, private residence clubs, and yachts. We offer travelers flexibility as to time of travel and a choice of lodging options. This flexibility also helps our timeshare developer affiliates, as it provides additional

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benefit to the timeshare product. We offer property owners marketing, booking and quality control services. Some of our rental brands also offer property management services ranging from key-holding to full property maintenance. We market our services and products using our nine primary consumer brands and other related brands in almost 200 offices worldwide. No one external customer, developer or group accounts for more than 2% of our vacation exchange and rentals revenues.

As the largest provider of vacation exchange and professionally managed vacation rentals, we leverage our inventory across our brands and business lines to maximize value for affiliates, exchange members, vacation rental property owners and guests. We also leverage our scale and global marketing expertise to enhance demand and drive occupancy across our portfolio. A prime example of this capability is the Wyndham Home Exchange program. This program generates unprecedented reach in the industry and provides our vacation rental property owners with the ability to deposit up to five weeks per property annually in exchange for intervals from within RCI’s portfolio of affiliated vacation ownership resorts. It allows exchange members the opportunity to access a wider variety of vacation properties, while also providing outstanding value to the vacation rental property owner.

We also provide industry-leading technology and revenue management expertise to optimize our exchange and vacation rental inventory through automated tools and sophisticated yield management techniques. Over the past several years, we have implemented these new tools and techniques to optimize pricing and occupancy in our vacation rental businesses, adopting best practices developed from years of investment and experience at RCI. These tools allow for automated price changes based on demand and other factors. In the end, we believe it’s more revenue for homeowners, more commissions for us, and a fair market-based price for the consumer. We will continue to expand revenue management capabilities across our brands in the coming years.

Vacation Exchange

Through our vacation exchange business, RCI, we have relationships with approximately 4,500 vacation ownership resorts in over 100 countries, located in North America, Europe, Latin America, Caribbean, Southern Africa, Asia Pacific and the Middle East regions. We tailor our strategies and operating plans for each region where RCI has or seeks to develop a substantial member base.

We have 3.8 million vacation exchange members and generally retain approximately 90% of such members each year. We generate fees from members for both annual membership subscriptions and transaction based services. In substantially all cases, we acquire new members when an affiliated resort developer buys the initial term of an RCI membership on behalf of a timeshare owner as part of the vacation ownership purchase process. Generally, this initial membership is for either a 1 or 2 year term, after which these new members can choose to renew at their own expense. In certain circumstances, renewals are paid for by the developer. Members are entitled to receive periodicals published by RCI and, for additional fees, to use the applicable exchange program and other services.

RCI operates three worldwide exchange programs that serve a member base of timeshare owners who want flexibility and variety in their travel plans each year. Our three vacation exchange programs are RCI Weeks, RCI Points and The Registry Collection. Participants in these programs pay annual membership dues, and for additional fees are entitled to exchange intervals for intervals at other properties affiliated with our vacation exchange business. In addition, certain members may exchange intervals for other leisure-related services and products which enable us to generate additional fees.


•	The RCI Weeks exchange program is the world's largest vacation ownership weeks-based exchange network and provides members with the ability to exchange week-long intervals in units at their original resorts for intervals at comparable resorts.

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The RCI Points exchange program is the world’s largest vacation ownership points-based exchange network. Such program allocates points to intervals that members cede to the exchange program. Members may redeem their points for the use of vacation properties in our exchange program or for discounts on other services and products which may change from time to time, such as airfare, car rentals, cruises, hotels and other accommodations. When points are redeemed for these other services and products, our vacation exchange business obtains the right to that member’s points and may rent vacation properties backed by these points in order to recoup the expense of providing discounts on other services and products.

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We believe that The Registry Collection exchange program is the industry’s largest and first global exchange network of luxury vacation accommodations. The luxury vacation accommodations in our network include fractional ownership resorts, higher-end vacation ownership resorts, condo-hotels and yachts. The Registry Collection program allows members to exchange their intervals for the use of other luxury vacation properties within the network for a fee and also offers access to other services and products, such as cruises, yachts, adventure travel, hotels and other accommodations.

Through innovation, RCI has developed a variety of value enhancing services and products for its members and affiliates. We introduced the use of trading power transparency, which allows RCI Weeks members to deposit their vacation intervals with RCI and obtain a specific trading power that they can then use to exchange for another interval within the program. Trading power transparency also allows members to combine deposited timeshare intervals for an additional fee, which enables them to exchange into higher-demanded vacations or receive a deposit credit if the value of their interval is greater than the interval into which they have exchanged. For an additional fee, we also offer trading power protection to members if they need to change or cancel an exchange transaction. RCI also offers Platinum level memberships, which provide exclusive exchange and lifestyle benefits to Weeks and Points members.

Vacation Rentals

Wyndham Vacation Rentals professionally manages unique, non-traditional vacation rental properties including privately-owned villas, homes, cottages, chalets, apartments and condominiums in over 550 destinations. The variety, location and quality of properties in our portfolio, in addition to the many benefits and services that we offer, provides consumers the opportunity to vacation in various parts of the world in properties with conveniences similar to their homes. In addition to these properties, we market inventory from our vacation exchange business and other sources. We generate fee income from marketing and renting these properties to consumers. We currently book approximately 1.6 million vacation rental weeks per year. Our vacation rentals business has approximately 103,000 properties with approximately 94,000 properties in Europe and over 9,000 properties in the U.S. The following is a description of some of our major proprietary vacation rental brands:


•	Wyndham Vacation Rentals U.K. has 70 years of industry experience and operates a number of well-recognized and established brands within the vacation rental market, including Hoseasons, cottages4you, and James Villa Holidays, and offers access to approximately 42,000 properties across the U.K. and Europe.


•	Novasol is one of continental Europe’s largest rental companies with over 45 years of industry experience, featuring properties in nearly 30 European countries including holiday homes in Denmark, Croatia, France, Italy, Sweden and Norway, with approximately 39,000 exclusive holiday homes available for rent through established brands such as Novasol, Dansommer and Cuendet.

•

Landal GreenParks is one of the Netherlands’ leading holiday park companies, with 60 years of industry experience. We have over 70 holiday parks offering over 12,000 holiday park chalets, as well as campsites with over 1,300 pitches in the Netherlands, Germany, Austria, the Czech Republic, Belgium, Switzerland and Hungary. Every year more than 2 million guests visit Landal’s parks, many of which offer dining, shopping and wellness facilities.


•	Wyndham Vacation Rentals N.A. offers over 9,000 rental properties, in beach, ski, mountain, theme park, golf and tennis resort destinations such as Florida, South Carolina, Colorado, Delaware, North Carolina, Alabama, Tennessee and Utah. We provide vacation rentals to travelers through acquired brands and have more than 35 years of industry experience.

Most of the rental activity under our brands occurs in Europe and the United States. Our vacation rentals business provides access to select inventory to our 3.8 million vacation exchange members and our vacation exchange and rentals business has the ability to source and rent inventory in over 100 countries.

Our vacation rentals business currently has relationships with over 61,000 independent property owners in 33 countries, including the United Kingdom, Denmark, the United States, Netherlands, Croatia, France, Italy, Sweden, Norway, Germany, Spain, Austria, Belgium, Ireland, Greece, Portugal and certain countries in Eastern Europe. Property owners typically enter into annual contracts with us to professionally manage the rental of their properties. Our vacation rentals business also has an ownership interest or capital leases under our Landal GreenParks brand in approximately 5% of the properties in our rental portfolio.

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Customer Development

In our vacation exchange business, we affiliate with vacation ownership developers directly through our in-house sales teams. Affiliated developers sign long-term agreements that have an average duration of approximately five years. Our members are acquired primarily through our affiliated developers as part of the vacation ownership purchase process. We also acquire a small percentage of our members directly online from the secondary vacation ownership market.

In our vacation rentals business, we primarily enter into exclusive annual rental agreements with property owners. We market these rental properties online and offline to large databases of customers. Additional customers are sourced through bookable websites and offline advertising and promotions, and through the use of third-party travel agencies, tour operators and online distribution channels to drive additional occupancy. We have a number of specific branded websites to promote, sell and inform new customers about vacation rentals.

Loyalty Program

Our U.S. vacation exchange business’s member loyalty program, RCI Elite Rewards, offers a co-branded credit card. The card allows members to earn reward points that can be redeemed for items related to our exchange programs, including annual membership dues, exchange fees for transactions, and other services and products offered by our vacation exchange business or certain third parties, including airlines and retailers.

Online Distribution

We will continue to invest in cutting edge technology and online capabilities to ensure that our members and rental customers have the best experience, with access to similar information and services that we provide through our call centers. We have several major initiatives ongoing to enhance our websites and e-commerce performance across our exchange and vacation rental brands. Enhancements include improved search and mobile functionality, enhanced site content and personalization for our members, vacation rental guests and property owners.

Through our comprehensive RCI.com initiatives which began in 2008, we launched enhanced vacation search, filtering and recommendation capabilities that greatly simplify our search process, making it easier for a member to find a desired vacation. We have also greatly expanded our online content, including multiple resort pictures and high-definition videos to help educate members about their vacation options. Additionally, through this initiative, we released a significant series of technology enhancements to our members. We have also enhanced our ability to merchandise offers through web only channels and have launched mobile technologies such as applications for smartphones and tablets to access RCI.com functionality.

Part of our strategy has been to improve our online distribution channels so that members and rental customers transact business online instead of through our call centers, which generates cost savings for us. Our RCI.com initiatives have increased our web penetration to 49% at the end of 2014 (up from 13% in 2008 when we launched these initiatives). As a result of enhancements made over the last several years, we have improved our web penetration for our vacation rentals business to over 60% by the end of 2014.

Call Centers

Our vacation exchange and rentals business also services its members and rental customers through global call centers. The requests we receive at our global call centers are handled by our vacation guides, who are trained to fulfill requests for exchanges and rentals. Call centers remain an important distribution channel for us and therefore we continue to invest resources to ensure that members and rental customers receive a high level of personalized customer service.

Marketing

We market to our members and rental customers through several marketing channels including direct mail, email, telemarketing, online distribution channels, brochures, magazines and travel agencies. Our vacation exchange business has a comprehensive social and mobile media platform including apps for smartphones and tablets, a Facebook fan page, several Twitter accounts and YouTube channels, an online video content network, and two online magazines. Our vacation exchange and rentals’ brands have approximately 95 publications involved in the marketing of the business, including various resort directories and periodicals related to the vacation industry. We use our publications for marketing as well as for member and rental customer retention and loyalty. Additionally, we promote our offerings to owners of resorts and vacation homes through trade shows, online and other marketing efforts that include direct mail and telemarketing.

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Strategies

Our strategy to grow our vacation exchange and rentals business profitability includes the following:


•	Inspire world-class associate engagement and “Count On Me!” service;


•	Invest in technology to improve the customer experience, grow market share and reduce costs;


•	Offer more options through market and product expansion, and by leveraging the scale of our inventory across brands;


•	Leverage analytics to maximize yield across our portfolio and improve key business processes; and


•	Promote the benefits of timeshare and vacation rentals to new and existing customer segments.

Our plans generally focus on pursuing these strategies organically. However, in appropriate circumstances, we will consider opportunities to acquire businesses, both domestic and international.

Seasonality

Vacation exchange revenues are normally highest in the first quarter, which is generally when members of RCI plan and book their vacations for the year. Rental transaction revenues earned are usually highest in the third quarter, when vacation arrivals are highest, combined with a compressed booking window, i.e., a reduction of the time between the booking date and the arrival date. Almost 60% of our European vacation rental customers book their reservations within 11 weeks of arrival dates and over 75% within 20 weeks of arrival dates. More than 60% of our North American vacation rental customers book their reservations within 7 weeks and almost 75% within 11 weeks of arrival dates.

Competition

The vacation exchange and rentals business faces competition throughout the world. Our vacation exchange business competes with a third-party international exchange company, with regional and local vacation exchange companies and with internet-only limited service exchanges. In addition, certain developers offer exchanges through internal networks of properties, which can be operated by us or by the developer, that offer owners of intervals access to exchanges other than those offered by our vacation exchange business. The vacation rentals business faces competition from a broad variety of professional vacation rental managers and rent-by-owner channels that collectively use brokerage services, direct marketing and the internet to market and rent vacation properties.

WYNDHAM VACATION OWNERSHIP

Vacation Ownership (Timeshare) Industry

The vacation ownership industry, also referred to as the timeshare industry, enables consumers to share ownership of a fully-furnished vacation accommodation. Typically, the consumer purchases either a title to a fraction of a unit or a right to use a property for a specific period of time. This is referred to as a VOI. For many purchasers, vacation ownership is an attractive alternative to traditional lodging accommodations at hotels. Unlike lodging customers, timeshare owners are immune to variability in room rates. Also, vacation ownership units are, on average, more than twice the size and typically have more amenities than traditional hotel rooms, such as kitchens or in-unit laundry.

VOIs are generally sold through weekly intervals or points-based systems. Under the weekly intervals system, owners can use a specific unit at a specific resort often during a specific week of the year. Under the points-based system, owners often have advanced reservation rights for a particular destination, but are free to redeem their points for various unit types and/or locations. In addition, points owners can vary the length and frequency of product utilization. Once point values are established for particular units, they generally cannot be changed, ensuring that the value of owner’s points never diminishes. Sales were equally divided between intervals and points in 2013 according to the American Resort Development Association (or “ARDA”, a trade association representing the vacation ownership and resort development industries).

The vacation ownership concept originated in Europe during the late 1960s and spread to the U.S. shortly thereafter. The industry expanded slowly in the U.S. until the mid-1980s. From the mid-1980s through 2007, it grew at a double-digit rate. Sales declined by approximately 8% in 2008 and experienced even greater declines in 2009 due to the global recession and a significant disruption in the credit markets. More recently, according to a 2014 report issued by ARDA, domestic vacation ownership sales were approximately $7.6 billion in 2013, compared to $6.9 billion in 2012.

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Based on published industry data, we believe that the following factors have contributed to the strength and stability, particularly in North America, of the vacation ownership industry:


•	strengthened consumer value proposition as timeshare resorts often provide superior accommodations compared with a hotel stay;


•	improved quality of resorts and resort management and servicing;


•	increased flexibility for timeshare owners made possible through affiliations with vacation ownership exchange companies and vacation ownership companies’ internal point exchange programs;


•	improved product perception resulting from the participation of widely known lodging and entertainment brands into the industry; and


•	increased consumer confidence in the industry based on enhanced consumer protection regulation of the industry.

Demographic factors explain, in part, the continued appeal of vacation ownership. A 2014 study of recent U.S. vacation ownership purchasers indicated that the median new purchaser was 51 years of age and had a median household income of $89,500. This, along with other industry data, suggests that the typical purchaser in the U.S. has disposable income and is interested in purchasing vacation products. We believe that baby boomers will continue to be active participants in the vacation ownership industry.

According to a 2014 ARDA study, nearly 83% of timeshare owners expressed satisfaction with the product. Most owners can exchange their timeshare unit through exchange companies, and through the applicable vacation ownership company’s internal network of properties.

Wyndham Vacation Ownership Overview

Wyndham Vacation Ownership is the largest vacation ownership business in the world as measured by revenues and the number of vacation ownership resorts, units and owners. We develop and acquire vacation ownership resorts, market and sell VOIs, provide consumer financing for the majority of the sales, and provide property management services to property owners’ associations. As of December 31, 2014, we had 203 vacation ownership resorts in the U.S., Canada, Mexico, the Caribbean and the South Pacific that represent approximately 24,000 individual vacation ownership units and approximately 904,000 owners of VOIs.

Our brands operate points-based vacation ownership programs through which VOIs can be redeemed for vacations that provide owners with flexibility as to resort location, length of stay, number of stays, unit type, and time of year. Our programs allow us to market and sell our vacation ownership products in variable quantities and to offer existing owners “upgrade” sales to supplement such owners’ existing VOIs. This contrasts with the fixed quantity of the traditional fixed-week vacation ownership, which is primarily sold on a weekly interval basis.

Our vacation ownership business derives a majority of its revenues from timeshare sales, with the remainder coming from consumer financing and property management. Property management revenues are partly dependent on the number of units we manage.

Although we operate separate brands, we have integrated substantially all of the business functions, including consumer finance, information technology, staff functions, product development and marketing activities.

In recent years, we have transformed the business through major initiatives such as tightening our lending standards, refining and enhancing our marketing channels and creating more capital efficient inventory sourcing models. These strategies have led to increased margins, improved cash flow and developing the WAAM concept which is discussed below.

Our Vacation Ownership Brands

Club Wyndham

As of December 31, 2014, over 524,000 owners held interests in Club Wyndham resort properties which are located primarily in the U.S. and consisted of 94 resorts (22 of which are shared with WorldMark by Wyndham and one of which is shared with Shell) that represented approximately 13,700 units.

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The majority of the resorts in which Club Wyndham markets and sells vacation ownership and other real estate interests are destination resorts located at or near attractions such as the Walt Disney World Resort in Florida; the Las Vegas Strip in Nevada; Myrtle Beach in South Carolina; Colonial Williamsburg in Virginia; and the Hawaiian Islands.

WorldMark by Wyndham

WorldMark by Wyndham is a club that offers an innovative credit-based system that gives owners greater flexibility and choice. The club consists of 83 resorts (22 of which are shared with Club Wyndham, one of which is shared with Wyndham Vacation Resorts Asia Pacific and one of which is shared with Shell), representing over 6,500 units which are located primarily in the Western U.S., Canada and Mexico. As of December 31, 2014, approximately 234,000 owners held vacation credits in the club. The resorts in which WorldMark by Wyndham markets and sells vacation credits are primarily drive-to resorts.

Wyndham Vacation Resorts Asia Pacific

As of December 31, 2014 approximately 50,000 owners held vacation credits for Wyndham Vacation Resorts Asia Pacific, which consists of 26 resorts (one of which is shared with WorldMark by Wyndham) representing over 1,200 units that are located primarily in the South Pacific.

Shell Vacations Club

We expanded our fee-for-service property management business with our acquisition of Shell Vacations Club in 2012. We assumed the property management operations at 25 Shell Vacations Club resorts (one of which is shared with Club Wyndham and one of which is shared with WorldMark by Wyndham), representing over 2,200 units as of December 31, 2014, which are primarily located in Hawaii, California, Arizona, Texas, Nevada, Oregon, New Hampshire, North Carolina, Wisconsin and Canada. Additionally, Shell Vacations Club sells VOIs and provides consumer financing to owners through its Shell Vacations Club brand. As of December 31, 2014, over 96,000 owners held vacation points in the Shell Vacations Club.

Maintenance Fees

Timeshare owners pay annual maintenance fees to the property owners’ associations responsible for managing the applicable resorts or to the Clubs. The annual maintenance fee associated with the average VOIs purchased ranges from approximately $400 to $1,000. These fees generally are used to renovate and replace furnishings, pay operating, maintenance and cleaning costs, pay management fees and expenses, and cover taxes in some states, insurance and other related costs. As the owner of unsold inventory at resorts or unsold interests in the Clubs, we also pay maintenance fees in accordance with the legal requirements of the jurisdictions in which the resorts are located. In addition, at certain newly-developed resorts, we sometimes enter into subsidy agreements with the property owners’ associations to cover costs that otherwise would be covered by annual maintenance fees payable with respect to VOIs that have not yet been sold.

Sales and Marketing

We employ a variety of marketing channels to encourage prospective owners of VOIs to tour our properties and attend sales presentations at off-site sales offices. Our resort-based sales centers also enable us to actively solicit upgrade sales to existing owners of VOIs while they vacation at our resort properties. We also operate a telesales program designed to market upgrade sales to existing owners of our products. Sales of VOIs relating to upgrades represented approximately 67%, 70%, and 70% of our net sales revenue of VOIs during 2014, 2013 and 2012, respectively.

We use a variety of marketing programs to attract prospective owners, including sponsored contests that offer vacation packages or gifts, targeted mailings, outbound and inbound telemarketing efforts, and in association with Wyndham Worldwide hotel brands, other co-branded marketing programs and events. We also partner with Wyndham Hotel Group by utilizing the Wyndham Rewards loyalty program to offer Wyndham Rewards points as an incentive to prospective VOI purchasers, and by providing additional redemption options to Wyndham Rewards members. Additionally, we offer purchasers of VOIs the opportunity to use the Wyndham Rewards co-branded credit card to earn additional Wyndham Rewards points and to partially finance their purchase. We also co-sponsor sweepstakes, giveaways, and promotional programs with professional teams at major sporting events and with other third parties at other high-traffic consumer events. Where permissible under state law, we offer existing owners cash awards or other incentives for referrals of new owners.

New owner acquisition is an important strategy for us as this will continue to maintain our pool of “lifetime” buyers of vacation ownership that will enable us to solicit upgrade sales in the future. We believe the market for VOI sales is under-penetrated, and we estimate that there are 53 million U.S. households that are potential purchasers of VOIs. We added approximately 30,000, 29,000 and 28,000 new owners during 2014, 2013 and 2012, respectively.

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Our marketing and sales activities are often facilitated through marketing alliances with other travel, hospitality, entertainment, gaming and retail companies that provide access to such companies’ customers through a variety of co-branded marketing offers. Our resort-based sales centers, which are located in popular travel destinations throughout the U.S., generate substantial tour flow by enabling us to market to tourists already visiting these destination areas. Our marketing agents (who often operate on the premises of the hospitality, entertainment, gaming and retail companies with which we have alliances) solicit tourists with offers relating to activities and entertainment in exchange for the tourists visiting the local resorts and attending sales presentations.

An example of a marketing alliance through which we market to tourists visiting destination areas is our current arrangement with Caesars Entertainment in Las Vegas, Nevada. This arrangement enables us to operate concierge-style marketing kiosks throughout select casinos and permits us to solicit patrons to attend sales presentations with casino-related rewards and entertainment offers, such as gaming chips, show tickets and dining certificates. We also operate our primary Las Vegas sales center within Harrah’s Casino and regularly shuttle prospective owners targeted by such sales centers to and from our nearby resort property.

Other marketing alliances provide us with the opportunity to align our marketing and sales programs with well-known lifestyle brands that appeal to consumers with similar demographics to our current purchasers. One such example is our alliance with Margaritaville, a lifestyle brand popularized by musician/entertainer Jimmy Buffett, where we market to patrons of various Margaritaville product lines via multiple channels, including on-site marketing at Margaritaville restaurants, affiliated venues and events, as well as co-branded vacation ownership offerings.

We offer a variety of entry-level programs and products as part of our sales strategy. For example, we have a program that allows prospective owners a one-time allotment of points or credits with no further obligations and a biennial product that provides for vacations every other year. As part of our sales strategies, we rely on our points/credits-based programs, which provide prospective owners with the flexibility to buy relatively small packages of points or credits which can then be upgraded at a later date. To facilitate upgrade sales among existing owners, we market opportunities for owners to purchase additional points or credits through periodic marketing campaigns and promotions while those owners vacation at our resort properties.

Purchaser Financing

We offer financing to purchasers of VOIs which attracts additional customers and generates substantial incremental revenues and profits. We fund and service loans extended by Club Wyndham and WorldMark by Wyndham through our consumer financing subsidiary, Wyndham Consumer Finance, a wholly owned subsidiary of Wyndham Vacation Resorts based in Las Vegas, Nevada. Wyndham Consumer Finance performs loan financing, servicing and related administrative functions. We have funded Shell Vacations Club loans since the date of acquisition through our consumer finance subsidiary, and service them through a third-party.

We typically perform a credit investigation or other inquiry into every purchaser’s credit history before offering to finance a portion of the purchase price of the VOIs. The interest rate offered to participating purchasers is determined by an automated underwriting process based upon the purchaser’s credit score, the amount of the down payment, and the size of purchase. We use a FICO score which is a branded version of a consumer credit score widely used within the U.S. by the largest banks and lending institutions. FICO scores range from 300 - 850 and are calculated based on information obtained from one or more of the three major U.S. credit reporting agencies that compile and report on a consumer’s credit history. For purchasers with large loan balances, we maintain higher credit standards for new loan originations. Our weighted average FICO score on new originations for 2014, 2013 and 2012 was approximately 725.

During 2014, we generated new receivables of approximately $1.0 billion on gross vacation ownership sales, net of WAAM Fee-for-Service sales, of $1.8 billion, which amounts to 56% of our vacation ownership sales being financed. This level of financing is prior to the receipt of addenda cash. Addenda cash represents the cash received for full payment of a loan within 15 to 60 days of origination. After the application of addenda cash, we finance approximately 49% of vacation ownership sales.

We generally require a minimum down payment of 10% of the purchase price on all sales of VOIs and offer consumer financing for the remaining balance for up to 10 years. While the minimum is generally 10%, in 2014, our average down payment was approximately 30% for financed sales of VOIs. These loans are structured with equal monthly installments that fully amortize the principal by the final due date. We offer third-party credit lines (Bill Me Later and a Wyndham Rewards co-branded credit card) to assist owners with financing their down payments.

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Similar to many other companies that provide consumer financing, we have historically securitized a majority of the receivables originated in connection with the sales of VOIs. We initially place the financed contracts into a revolving warehouse securitization facility, generally within 30 to 90 days after origination. Many of the receivables are subsequently transferred from the warehouse securitization facility and placed into term securitization facilities.

Our consumer financing subsidiary is responsible for the maintenance of contract receivables files as well as all customer service, billing and collection activities related to the domestic loans we extend (except for loans associated with Shell Vacations Club). We assess the performance of our loan portfolio by monitoring numerous metrics including collections rates, defaults by state of residency and bankruptcies. Our consumer financing subsidiary also manages the selection and processing of loans pledged or to be pledged in our warehouse and term securitization facilities. As of December 31, 2014, our loan portfolio was 96% current (i.e., not more than 30 days past due).

Property Management

On behalf of each of the property owners’ associations, we or our affiliates generally provide day-to-day management for vacation ownership resorts, which includes oversight of housekeeping services, maintenance and refurbishment of the units, and provides certain accounting and administrative services to property owners’ associations. The terms of the property management agreements vary, however, the vast majority of the agreements provide a mechanism for automatic renewal upon expiration of the terms. In connection with these property management services, we receive fees which are generally based upon total costs to operate such resorts. Fees for property management services typically approximate 10% of budgeted operating expenses.

Wyndham Vacation Resorts, itself or through a Wyndham Vacation Resorts affiliate, manages Club Wyndham Plus, the majority of property owners’ associations at resorts developed by Wyndham Vacation Resorts and property owners’ associations at resorts developed by third parties. Wyndham Vacation Resorts (or its affiliate) manages the reservation system, and provides owner services, and billing and collections services on behalf of the Club Wyndham Plus trust. The agreement under which we manage the Club Wyndham Plus program has a five-year term and it is automatically renewed for successive terms of five years, provided the trustee under the program does not serve notice of termination to us at the end of any calendar year.

WorldMark by Wyndham, itself or through a WorldMark by Wyndham affiliate, serves as the exclusive property manager and servicing agent of WorldMark, the Club and WorldMark, South Pacific Club, as well as all resort units owned or operated by these Clubs. WorldMark by Wyndham or its affiliate also manages the reservation system for the Clubs, and provides owner services and billing and collections services. The initial term of the management agreement is for three years and is automatically renewed annually thereafter, provided the trustee under the program does not serve notice of termination to WorldMark by Wyndham prior to expiration of the then current term.

SVC Hospitality, LLC, a direct subsidiary of Shell Vacations LLC, itself or through its affiliates, serves as the exclusive manager of Shell Owners Clubs American, Hawaii, Pacific and West (collectively, the “Shell Vacations Club”), and as the managing agent for many of the affiliated property owners’ associations. The management agreements for the Shell Vacations Club are subject to auto-renewal every three to five years, provided that Shell Vacations Club does not serve notice of termination prior to expiration of the then current term. Such notice requires the affirmative vote of the members in the association.

Inventory Sourcing

We sell inventory sourced primarily through four channels:


1.	Self-developed inventory,


2.	WAAM,


3.	Consumer loan defaults, and


4.	Inventory reclaimed from owners’ associations or owners.

Following are descriptions of these inventory sources:

1. Self-developed inventory: Under the traditional timeshare industry development model, we finance and develop inventory specifically for our timeshare sales. The process often begins with the purchase of raw land which we then develop. Depending on the size and complexity of the project, this process can take several years. Such inventory can include mixed-use inventory developed in conjunction with one of our hotel brands, where a portion of the property is devoted to the timeshare product.

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2. WAAM: In 2010, we introduced the first of our WAAM models, WAAM Fee-for Service (formerly known as WAAM 1.0). This timeshare sourcing model was designed to capitalize upon the large quantities of newly developed, nearly completed or recently finished condominium or hotel inventory in the real estate market without assuming the significant risk that accompanies property acquisition or new construction. This business model offers turn-key solutions for developers or banks in possession of newly developed inventory, which we sell for a fee through our extensive sales and marketing channels. WAAM Fee-for-Service enables us to expand our resort portfolio with little or no capital deployment, while providing additional channels for new owner acquisition and growth for our fee-for-service property management business.

In addition to the WAAM Fee-for-Service business model, in 2012, we introduced WAAM Just-in-Time (formerly known as WAAM 2.0), which is an inventory acquisition model. This strategy enables us to acquire and own completed units close to the timing of their sale and significantly reduces the period between the deployment of capital to acquire inventory and the subsequent return on investment which occurs at the time of its sale to a timeshare purchaser. For the most part, inventory is recorded on our balance sheet at the time we are committed to purchase such inventory, which generally coincides with the time of registration.

3. Consumer loan defaults: As discussed in the “Purchaser Financing” section, we offer financing to purchasers of VOIs. In the event of a default, we are able to recover the inventory and resell it at full current value. We are responsible for the payment of maintenance fees to the property owners’ associations until the product is sold. As of December 31, 2014, inventory on the Consolidated Balance Sheet included assumed recoveries of loan defaults in the amount of $235 million.

4. Inventory reclaimed from owners’ associations or owners: We have entered into agreements with a majority of the property associations representing our developments where we may acquire properties from the associations, provided there is no outstanding debt on such properties related to owners who have defaulted on their maintenance fees. In addition, we frequently work with owners to acquire their properties, provided they have no outstanding debt on such properties, prior to them defaulting on their maintenance fees. This provides the owner a graceful exit from a property that is no longer utilized due to lifestyle changes.

Strategies

We are focused on the following strategic objectives:


•	driving free cash flow through efficient inventory procurement, optimizing our consumer loan portfolio and increasing operating efficiencies;


•	adding new members efficiently through new inventory locations, new tour sources and enhanced third-party alliances; and


•	pursuing expansion into new markets.

Seasonality

We rely, in part, upon tour flow to generate sales of VOIs; consequently, sales volume tends to increase in the spring and summer months as a result of greater tour flow from spring and summer travelers. Therefore, revenues from sales of VOIs are generally higher in the second and third quarters than in other quarters. We cannot predict whether these seasonal trends will continue in the future.

Competition

The vacation ownership industry is highly competitive and is comprised of a number of companies specializing primarily in sales and marketing, consumer financing, property management and development of vacation ownership properties.

TRADEMARKS

Our brand names and related trademarks, service marks, logos and trade names are very important to the businesses that make up our Wyndham Hotel Group, Wyndham Exchange & Rentals and Wyndham Vacation Ownership business units. Our subsidiaries actively use or license for use all significant marks, and we own or have exclusive licenses to use these marks. We register the marks that we own in the United States Patent and Trademark Office, as well as with other relevant authorities where we deem appropriate, and seek to protect our marks from unauthorized use as permitted by law.

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EMPLOYEES

As of December 31, 2014, we had approximately 34,400 employees, including approximately 9,000 employees outside of the U.S. As of December 31, 2014, our lodging business had approximately 6,400 employees, our vacation exchange and rentals business had approximately 10,100 employees, our vacation ownership business had approximately 17,200 employees and our corporate group had approximately 700 employees. Approximately 3% of our employees are subject to collective bargaining agreements governing their employment with our company.

ENVIRONMENTAL COMPLIANCE

Our compliance with laws and regulations relating to environmental protection and discharge of hazardous materials has not had a material impact on our capital expenditures, earnings or competitive position and we do not anticipate any material impact from such compliance in the future.

SUSTAINABILITY

We have made a commitment to be at the forefront of sustainability and green business practices. We have set goals of reducing our carbon emissions and water usage by 20% per square foot by the year 2020 using 2010 as our baseline. We also have a goal to ensure that 30% of our qualified supply chain by 2020 is spent with suppliers who meet our Wyndham Green criteria. We continue to meet or surpass all environmental regulations in areas where we do business. Our sustainability efforts have enabled us to not only conserve resources but also contribute to our bottom line through cost savings.

ITEM 1A. RISK FACTORS

Before you invest in our securities you should carefully consider each of the following risk factors and all of the other information provided in this report. We believe that the following information identifies the most significant risks that may impact us. However, the risks and uncertainties we face are not limited to those set forth in the risk factors described below. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. In addition, past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. If any of the following risks and uncertainties develops into an actual event, the event could have a material adverse effect on our business, financial condition or results of operations. In such case the market price of our common stock could decline.

The hospitality industry is highly competitive and we are subject to risks relating to competition that may adversely affect our performance.

We will be adversely impacted if we cannot compete effectively in the highly competitive hospitality industry. Our continued success depends upon our ability to compete effectively in markets that contain numerous competitors, some of which may have significantly greater financial, marketing and other resources than we have. Competition may reduce fee structures, potentially causing us to lower our fees or prices, which may adversely impact our profits. New competition or existing competition that uses a business model that is different from our business model may put pressure on us to change our model so that we can remain competitive.

We may not be able to achieve our growth and performance objectives.

We may not be able to achieve our growth and performance objectives for increasing our earnings and cash flows, the number of franchised and/or managed properties in our lodging business, the number of vacation exchange members in our vacation exchange business and related transactions, the number of rental weeks sold by and the number of units in our vacation rentals businesses and the number of tours and new owners generated and vacation ownership interests sold by our vacation ownership business.

Acquisitions and other strategic transactions may not prove successful and could result in operating difficulties and failure to realize anticipated benefits.

We regularly consider a wide array of acquisitions and other potential strategic transactions, including acquisitions of businesses, property acquisitions, joint ventures, business combinations, strategic investments and dispositions. Any of these transactions could be material to our business. We often compete for these opportunities with third parties, which may cause us to lose potential opportunities or to pay more than we might otherwise have paid absent such competition. We cannot assure you that we will be able to identify and consummate strategic transactions and opportunities on favorable terms or that any such strategic transactions or opportunities, if consummated, will be successful. Acquisitions and other strategic transactions involve significant risk and the process of integrating and assimilating any strategic transaction may create unforeseen operating

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difficulties and costs and we may not realize the anticipated benefits of any of these strategic transactions or opportunities. Pursuing and consummating strategic transactions and opportunities may require us to obtain significant additional debt or equity financing, spend existing cash or incur liabilities and other expenses including amortization of acquired intangible assets or write-offs of goodwill. Strategic transactions may be entered into by us or by one or more of our subsidiaries. With respect to those transactions entered into by a subsidiary, we may from time to time provide a performance guaranty of the subsidiary’s obligations, which may expose us to litigation risks in the event of a dispute between transaction parties.

We are dependent on our senior management.

We believe that our future growth depends in part on the continued services of our senior management team. Losing the services of any members of our senior management team could adversely affect our strategic and customer relationships and impede our ability to execute our business strategies.

Our revenues are highly dependent on the travel industry and declines in or disruptions to the travel industry such as those caused by economic slowdown, terrorism, political strife, pandemics or threats of pandemics, acts of God and war may adversely affect us.

Declines in or disruptions to the travel industry may adversely impact us. Risks affecting the travel industry include: economic slowdown and recession; economic factors such as increased costs of living and reduced discretionary income adversely impacting consumers’ and businesses’ decisions to use and consume travel services and products; terrorist incidents and threats and associated heightened travel security measures; political and geographical strife; acts of God such as earthquakes, hurricanes, fires, floods, volcanoes and other natural disasters; war; concerns with or threats of pandemics or contagious diseases or health epidemics; environmental disasters such as the Gulf of Mexico oil spill; increased pricing, financial instability and capacity constraints of air carriers; airline job actions and strikes; and increases in gasoline and other fuel prices.

We are subject to operating or other risks common to the hospitality industry.

Our business is subject to numerous operating or other risks common to the hospitality industry including:


•	changes in operating costs including inflation, energy, labor costs such as minimum wage increases and unionization, workers’ compensation and health-care related costs and insurance;


•	increases in travel costs including air travel would likely impact consumer preferences with respect to certain of our vacation and resort destinations and vacation ownership preferences and, if such conditions were to be sustained, the desirability of our vacation, resort and hotel products and offerings could be adversely impacted;


•	changes in desirability of geographic regions of the hotels or resorts in our business;


•	changes in the supply and demand for hotel rooms, vacation exchange and rental services and products and vacation ownership services and products;


•	evolving changes in consumer travel and vacation patterns and consumer preferences;


•	seasonality in our businesses, which may cause fluctuations in our operating results;


•	geographic concentrations of our operations and customers;


•	increases in costs due to inflation that may not be fully offset by price and fee increases in our business;


•	availability of acceptable financing and cost of capital as they apply to us, our customers, current and potential hotel franchisees and developers, owners of hotels with which we have hotel management contracts, our RCI affiliates and other developers of vacation ownership resorts;


•	the quality of the services provided by franchisees, affiliated resorts in our vacation exchange business, properties in our vacation rentals business or resorts in which we sell vacation ownership interests may adversely affect our image, reputation and brand value;


•	our ability to generate sufficient cash to buy from third-party suppliers the products that we need to provide to the participants in our points programs who want to redeem points for such products;


•	overbuilding or excess capacity in one or more segments of the hospitality industry or in one or more geographic regions;


•	our ability to develop and maintain positive relations and contractual arrangements with current and potential franchisees, hotel owners, vacation exchange members, vacation ownership interest owners, resorts with units that are exchanged through our vacation exchange business and/or owners of vacation properties that our vacation rentals business markets for rental;


•	our ability to adjust our business model to generate greater cash flow and require less capital expenditures;


•	organized labor activities and associated litigation;


•	maintenance and infringement of our intellectual property;


•	the bankruptcy or insolvency of any one of our customers, which could impair our ability to collect outstanding fees or other amounts due or otherwise exercise our contractual rights;


•	our insurance coverage may not be adequate to cover catastrophic or other losses to our properties or other assets;

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•	our failure to keep pace with technological developments could impair our competitive position;


•	increases in the use of third-party and competitor internet services to book hotel reservations, secure short-term lodging accommodations and market vacation rental properties;


•	disruptions in relationships with third parties including marketing alliances and affiliations with e-commerce channels;


•	changes in the number, occupancy and room rates of hotels operating under franchise and management agreements;


•	revenues from our lodging business are indirectly affected by our franchisees’ pricing decisions;


•	franchisees that have development advance notes with us may experience financial difficulties;


•	consolidation of developers could adversely affect our vacation exchange business;


•	significant decrease in the supply of available vacation rental accommodations due to ongoing property renovations could adversely affect our vacation rental business;


•	our continued management of homeowners associations depends on their ability to collect sufficient maintenance fees;


•	our ability to securitize the receivables that we originate in connection with sales of vacation ownership interests;


•	the sale of vacation ownership interests in the secondary market could negatively impact our sales;


•	unlawful or deceptive third-party vacation ownership interest resale schemes could damage our reputation and brand value;

•

the availability of and competition for desirable sites for the development of vacation ownership properties; difficulties associated with obtaining entitlements to develop vacation ownership properties; liability under state and local laws with respect to any construction defects in the vacation ownership properties we develop; our ability to adjust our pace of completion of resort development relative to the pace of our sales of the underlying vacation ownership interests; and risks related to real estate project development costs and completion; and


•	private resale of vacation ownership interests could adversely affect our vacation ownership resorts and vacation exchange businesses.

Third-party Internet reservation systems may adversely impact us.

Consumers increasingly use third-party Internet travel intermediaries to search for and book their hotel, resort and other travel accommodations. As the use of these third-party Internet reservation channels increases, consumers may rely upon these third-party Internet systems to the detriment of the reservations systems provided by our own lodging and rental brands, which may impact consumer preferences for lodging choices outside of our own brands and adversely impact our bookings and rates.

The continued success of our hotel business relies upon continued growth in the number of hotel properties under our brands and the performance of our franchisees.

We have been historically successful in growing the number of our brands and franchised hotels in our hotel business and our revenues and profitability in our hotel segment relies upon our achieving continued growth objectives for franchised hotels in this segment. We are subject to many challenges in growing and sustaining our growth in the number of our franchised hotels including maintaining the quality of our service, operational support and reservation systems to support our franchisees, our ability to compete with other hotel owners for existing and future hotel franchisees, our ability to continue and enhance consumer acceptance of our brands and the quality of our managers and entire organization in supporting our hotel business. We also are subject to the risk of entering into franchise relationships with owners and operators who do not achieve or maintain the quality standards we set, which if not appropriately and timely addressed could adversely impact our brand image and our ability to attract quality franchisee operators.

Our hotel business depends in part on our management arrangements with third parties.

Our hotel business is a party to management arrangements with certain of our hotel owners and franchisees, under which we typically are required to satisfy certain financial and performance criteria and standards. Our ability to satisfy these financial and other performance criteria is subject to many of the risks common to the hotel industry as described in this report including factors and circumstances outside of our control such as economic conditions and consumer travel and lodging preferences, as well as risks within our control such as the efforts and quality of our managers overseeing these management arrangements and our operating performance generally. Should any significant number of these arrangements be terminated by reason of our failure to satisfy financial or performance criteria, it may have an adverse impact on our operating performance and profitability. We may provide a parent guaranty of our subsidiaries’ performance under the guaranty which could expose us to litigation risks in the event of a dispute. We cannot assure you that all of our current and future management arrangements will continue or that we will be able to enter into new management arrangements in the future on favorable terms.

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We are subject to risks related to our vacation ownership receivables portfolio.

We are subject to risks that purchasers of vacation ownership interests who finance a portion of the purchase price default on their loans due to adverse macro or personal economic conditions or otherwise, which would increase loan loss reserves and adversely affect loan portfolio performance; that if such defaults occur during the early part of the loan amortization period we will not have recovered the marketing, selling, administrative and other costs associated with such vacation ownership interests; such costs will be incurred again in connection with the resale of the repossessed vacation ownership interest; and the value we recover in a default is not in all instances sufficient to cover the outstanding debt.

Our international operations are subject to risks not generally applicable to our domestic operations.

Our international operations are subject to numerous risks including exposure to local economic conditions; potential adverse changes in the diplomatic relations of foreign countries with the U.S.; hostility from local populations; political instability; threats or acts of terrorism; restrictions and taxes on the withdrawal of foreign investment and earnings; government policies against businesses owned by foreigners; investment restrictions or requirements; diminished ability to legally enforce our contractual rights in foreign countries; foreign exchange restrictions; fluctuations in foreign currency exchange rates; conflicts between local laws and U.S. laws including laws that impact our rights to protect our intellectual property; withholding and other taxes on remittances and other payments by subsidiaries; and changes in and application of foreign taxation structures including value added taxes. Any adverse outcome resulting from the financial instability or performance of European economies, the instability of the Euro currency and the related volatility on foreign exchange and interest rates could have an effect on our results of operations, financial position or cash flows.

We are subject to certain risks related to our indebtedness, hedging transactions, securitization of certain of our assets, surety bond requirements, the cost and availability of capital and the extension of credit by us.

We are a borrower of funds under our credit facilities, credit lines, senior notes, commercial paper programs and securitization financings. We extend credit when we finance purchases of vacation ownership interests and in instances when we provide key money, development advance notes and mezzanine or other forms of subordinated financing to assist franchisees and hotel owners in converting to or building a new hotel branded under one of our hotel brands. We use financial instruments to reduce or hedge our financial exposure to the effects of currency and interest rate fluctuations. We are required to post surety bonds in connection with our development and sales activities. In connection with our debt obligations, hedging transactions, securitization of certain of our assets, surety bond requirements, the cost and availability of capital and the extension of credit by us, we are subject to numerous risks including:


•	our cash flows from operations or available lines of credit may be insufficient to meet required payments of principal and interest, which could result in a default and acceleration of the underlying debt and under other debt instruments that contain cross-default provisions;


•	if we are unable to comply with the terms of the financial covenants under our revolving credit facility or other debt, including a breach of the financial ratios or tests, such non-compliance could result in a default and acceleration of the underlying revolver debt and under other debt instruments that contain cross-default provisions;


•	our leverage may adversely affect our ability to obtain additional financing;


•	our leverage may require the dedication of a significant portion of our cash flows to the payment of principal and interest thus reducing the availability of cash flows to fund working capital, capital expenditures, dividends, share repurchases or other operating needs;


•	increases in interest rates;


•	rating agency downgrades for our debt that could increase our borrowing costs and prevent us from obtaining additional financing;


•	failure or non-performance of counterparties to foreign exchange and interest rate hedging transactions;

•

we may not be able to securitize our vacation ownership contract receivables on terms acceptable to us because of, among other factors, the performance of the vacation ownership contract receivables, adverse conditions in the market for vacation ownership loan-backed notes and asset-backed notes in general and the risk that the actual amount of uncollectible accounts on our securitized vacation ownership contract receivables and other credit we extend is greater than expected;


•	our securitizations contain portfolio performance triggers which if violated may result in a disruption or loss of cash flow from such transactions;


•	a reduction in commitments from surety bond providers which may impair our vacation ownership business by requiring us to escrow cash in order to meet regulatory requirements of certain states;


•	prohibitive cost and inadequate availability of capital could restrict the development or acquisition of vacation ownership resorts by us and the financing of purchases of vacation ownership interests;


•	the inability of hotel owners that have received mezzanine and other loans from us to pay back such loans; and

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•	if interest rates increase significantly, we may not be able to increase the interest rate offered to finance purchases of vacation ownership interests by the same amount of the increase or such higher interest rates could reduce the desirability or demand of our customers for acquiring or financing our vacation ownership interests.

Economic conditions affecting the hospitality industry, the global economy and credit markets generally may adversely affect our business and results of operations, our ability to obtain financing or securitize our receivables on reasonable and acceptable terms, the performance of our loan portfolio and the market price of our common stock.

The future economic environment for the hospitality industry and the global economy may continue to be challenged. The hospitality industry has experienced and may continue to experience significant downturns in connection with or in anticipation of declines in general economic conditions. The current economy has been characterized by higher unemployment, lower family income, lower business investment and lower consumer spending, leading to lower demand for hospitality services and products. Declines in consumer and commercial spending may adversely affect our revenues and profits.

Our access to credit and capital also depends in large measure on market liquidity factors, which we do not control. Our ability to access the credit and capital markets may be restricted at times when we require or would like access to those credit and capital markets, which could impact our business plans and operating model. Uncertainty or volatility in the equity and credit markets may also negatively affect our ability to access short-term and long-term financing on reasonable terms or at all, which would negatively impact our liquidity and financial condition. In addition, if one or more of the financial institutions that support our existing credit facilities fails we may not be able to find a replacement, which would negatively impact our ability to borrow under the credit facilities. Disruptions in the financial markets may adversely affect our credit rating and the market value of our common stock. If we are unable to refinance or repay our outstanding debt when due, our results of operations and financial condition will be materially and adversely affected.

While we believe we have adequate sources of liquidity to meet our anticipated requirements for working capital, debt service and capital expenditures for the foreseeable future, if our cash flow or capital resources prove inadequate we could face liquidity problems that could materially and adversely affect our results of operations and financial condition.

Our liquidity as it relates to our vacation ownership contract receivables securitization program could be adversely affected if we were to fail to renew or replace our securitization warehouse conduit facility on its renewal date or if a particular receivables pool were to fail to meet certain ratios, which could occur in certain instances if the default rates or other credit metrics of the underlying vacation ownership contract receivables deteriorate. Our ability to sell securities backed by our vacation ownership contract receivables depends on the continued ability and willingness of capital market participants to invest in such securities.

It is possible that asset-backed securities issued pursuant to our securitization programs could in the future be downgraded by credit agencies. If a downgrade occurs our ability to complete other securitization transactions on acceptable terms or at all could be jeopardized. We could be forced to rely on other potentially more expensive and less attractive funding sources to the extent available which would decrease our profitability and may require us to adjust our business operations accordingly including reducing or suspending our financing to purchasers of vacation ownership interests.

If for any reason our sources of liquidity, including our securitization programs, were to decrease such that we were required to reduce or suspend our financing for any significant number of purchases of our vacation ownership contracts, our sales of vacation ownership interests would likely decrease, which would adversely impact our revenues, cash flows and profitability.

An increase in interest rates would increase our financing costs and could adversely impact the demand for our vacation ownership interests.

Rising interest rates would increase the interest rates we pay in connection with our indebtedness, which would reduce our profitability and our cash flow available for other corporate purposes. While we may enter into interest rate hedging arrangements to reduce the impact of increased interest rates, the cost of such hedging arrangements can be significant. In addition, if the cost of consumer financing to our customers and prospective customers for our vacation ownership interests were to rise, the demand for these products may decline, which could adversely impact our revenues and profitability.

We are subject to risks related to litigation.

We are subject to a number of legal actions and the risk of future litigation as described in this report. We cannot predict with certainty the ultimate outcome and related damages and costs of litigation and other proceedings filed by or against us. Adverse results in litigation and other proceedings may harm our business.

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Our businesses are subject to extensive regulation and the cost of compliance or failure to comply with such regulations may adversely affect us.

Our businesses are heavily regulated by federal, state and local governments in the countries in which our operations are conducted. In addition, domestic and foreign federal, state and local regulators may enact new laws and regulations that may reduce our revenues, cause our expenses to increase or require us to modify substantially our business practices. If we are not in compliance with applicable laws and regulations including among others those governing franchising, timeshare, consumer financing and other lending, information security and data privacy, marketing and sales, unfair and deceptive trade practices, telemarketing including “do not call” legislation, data protection, licensing, labor, employment, health care, health and safety, accessibility, immigration, gaming, environmental including climate change, securities, stock exchange listing, accounting, tax and regulations applicable under the Dodd-Frank Act, Office of Foreign Asset Control and the Foreign Corrupt Practices Act and local equivalents in international jurisdictions, we may be subject to regulatory investigations or actions, fines, penalties, injunctions and potential criminal prosecution. In addition, increases in the cost and administrative burden of compliance with such laws and regulations would impact our business operations and would adversely impact our operating performance including our profitability.

We have substantial business operations outside the U.S. and we are subject to compliance with significant laws and regulations governing fraud, bribery and other anti-corruption laws.

Legislation such as the Foreign Corrupt Practices Act, The United Kingdom Bribery Act and other similar fraud, bribery and anti-corruption laws prohibit companies and their intermediaries from making improper payments to public and/or private officials for the purposes of obtaining or retaining business. We have policies and processes in place for the purpose of monitoring compliance with these laws. We provide training to our employees as part of our compliance programs in order to protect against noncompliance or violations of these laws. However, there can be no assurance that our policies, processes, and training will always protect us against any noncompliance with these laws and regulations. Should we violate or not comply with any of these fraud, bribery or other anti-corruption laws or regulations, either intentionally or unintentionally, or through the acts of intermediaries, we could incur significant civil and criminal penalties, which could have a material adverse effect on our business, brands, financial condition and results of operations.

We are subject to extensive federal, state and local environmental laws and regulations.

Our operations, as well as the operations of our hotel and other property owners, are subject to a significant array of environmental laws and regulations, including those relating to discharges into water, emissions to air, releases of hazardous and toxic substances and remediation of contaminated sites. Pursuant to such laws and regulations we could be liable for the cost of cleaning up or removing hazardous substances at or in connection with our currently or formerly owned or operated properties, often whether or not the owner or operator knew of or was responsible for the presence, discharge or transfer of such hazardous or toxic substances. The cost of investigation, remediation and other requirements for the clean-up, treatment or remediation of contaminated sites could be substantial. Further, contamination on or from any of our currently or formerly owned or operated properties could subject us to liability to third parties or governmental authorities for remediation costs and injuries to persons, property or natural resources. Although we do not typically arrange for the treatment or disposal of large quantities of hazardous or toxic substances, we could also be held liable for the clean-up of third-party disposal sites where we have arranged for the disposal of our wastes.

Our ability to successfully market our services and products may be adversely impacted by continued changes in privacy laws and regulations.

Our operating model relies on a broad array of marketing programs to our customers and prospective customers, including telemarketing, emails, social media and other marketing techniques and programs. These marketing programs are subject to extensive laws and regulations in the U.S. and international markets regulating consumer marketing and solicitation as well as data protection. While we continue to monitor all such laws and regulations, the cost of compliance impacts our operating costs. In addition, these laws require us to regularly adjust our marketing programs and techniques, and compliance with all of these laws and regulations may impact and restrict the success of our marketing programs, which could lead to less frequent or less impactful marketing to our customers and our prospective customers.

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Failure to maintain the security of personally identifiable and other information, non-compliance with our contractual or other legal obligations regarding such information or a violation of our privacy and security policies with respect to such information could adversely affect us.

On June 26, 2012, the U.S. Federal Trade Commission (“FTC”) filed a lawsuit in Federal District Court for the District of Arizona against us and our subsidiaries, Wyndham Hotel Group, LLC, Wyndham Hotels & Resorts Inc. and Wyndham Hotel Management Inc., alleging unfairness and deception-based violations of Section 5 of the FTC Act in connection with three prior data breach incidents involving a group of Wyndham brand hotels. We dispute the allegations in the lawsuit and are defending this lawsuit vigorously. We do not believe that the data breach incidents were or expect that the outcome of the FTC litigation will be material to us.

In connection with our business, we and our service providers collect and retain large volumes of certain types of personal and proprietary information pertaining to our customers, stockholders and employees. Such information includes but is not limited to large volumes of customer credit and payment card information. The legal, regulatory and contractual environment surrounding information security and privacy is constantly evolving and the hospitality industry is under increasing attack by cyber-criminals operating on a global basis. Our information technology infrastructure and information systems may also be vulnerable to system failures, computer hacking, cyber-terrorism, computer viruses, and other intentional or unintentional interference, negligence, fraud, misuse and other unauthorized attempts to access or interfere with these systems and our personal and proprietary information. The increased scope and complexity of our information technology infrastructure and systems could contribute to the potential risk of security breaches or breakdown. While we maintain what we believe are reasonable security controls over proprietary information as well as the personal information of our customers, stockholders and employees, any breach of or breakdown in our systems that results in the unauthorized release of proprietary or personal information could nevertheless occur and have a material adverse effect on our brands, reputation, business, financial condition and results of operations, as well as subject us to significant regulatory actions and fines, litigation, loss, third-party damages and other liabilities. Such a breach or a breakdown could also materially increase our costs to protect such information and to protect against such risks. A failure on our part to comply with information security, privacy and other similar laws and regulations with respect to the protection and privacy of personal or proprietary information could subject us to significant fines and other regulatory sanctions.

The insurance that we carry may not at all times cover our potential liabilities, losses or replacement costs.

We carry insurance for general liability, property, business interruption and other insurable risks with respect to our business and properties. We also self-insure for certain risks for up to certain monetary limits. The terms and conditions or the amounts of coverage of our insurance may not at all times be sufficient to pay or reimburse us for the amount of our liabilities, losses or replacement costs, and there may also be risks for which we do not obtain insurance in the full amount concerning a potential loss or liability, or at all, due to the cost or availability of such insurance. As a result, we may incur liabilities or losses in the operation of our business, which may be substantial, which are not sufficiently covered by the insurance we maintain, or at all, which could have a material adverse effect on our business, financial condition and results of operations.

Our inability to adequately protect and maintain our intellectual property could adversely affect our business.

Our inability to adequately protect and maintain our trademarks, trade dress and other intellectual property rights could adversely affect our business. We generate, maintain, utilize and enforce a substantial portfolio of trademarks, trade dress and other intellectual property that are fundamental to the brands that we use in all of our businesses. There can be no assurance that the steps we take to protect our intellectual property will be adequate. Any event that materially damages the reputation of one or more of our brands could have an adverse impact on the value of that brand and subsequent revenues from that brand. The value of any brand is influenced by a number of factors including consumer preference and perception and our failure to ensure compliance with brand standards.

Disasters, disruptions and other impairment of our information technologies and systems and service facilities could adversely affect our business.

Any disaster, disruption or other impairment in our technology capabilities and service facilities could harm our business. Our businesses depend upon the use of sophisticated information technologies and systems, including technology and systems utilized for reservation systems, vacation exchange systems, hotel/property management, communications, procurement, member record databases, call centers, operation of our loyalty programs and administrative systems. We also maintain physical facilities to support these systems and related services. The operation, maintenance and updating of these technologies, systems and facilities are dependent upon internal and third-party technologies, systems, services and support and are subject to natural disasters and other disruptions for which there are no assurances of uninterrupted availability or adequate protection.

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We are subject to risks related to corporate responsibility.

Many factors influence our reputation and the value of our brands including perceptions of us held by our key stakeholders and the communities in which we do business. Businesses face increasing scrutiny of the social and environmental impact of their actions and there is a risk of damage to our reputation and the value of our brands if we fail to act responsibly or comply with regulatory requirements in a number of areas such as safety and security, sustainability, responsible tourism, environmental management, human rights, climate change or availability of resources and support for local communities.

The market price of our shares may fluctuate.

The market price of our common stock may fluctuate depending upon many factors some of which may be beyond our control including our quarterly or annual earnings or those of other companies in our industry; actual or anticipated fluctuations in our operating results due to seasonality and other factors related to our business; changes in accounting principles or rules; announcements by us or our competitors of significant acquisitions or dispositions; the failure of securities analysts to cover our common stock; changes in earnings estimates by securities analysts or our ability to meet those estimates; the operating and stock price performance of comparable companies; overall market fluctuations; and general economic conditions. Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.

Your percentage ownership in Wyndham Worldwide may be diluted in the future.

Your percentage ownership in Wyndham Worldwide may be diluted in the future because of equity awards that we have and expect will be granted over time to our Directors and employees. In addition, our Board may issue shares of our common and preferred stock and debt securities convertible into shares of our common and preferred stock up to certain regulatory thresholds without shareholder approval.

Provisions in our certificate of incorporation and by-laws and under Delaware law may prevent or delay an acquisition of Wyndham Worldwide which could impact the trading price of our common stock.

Our certificate of incorporation and by-laws and Delaware law contain provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive and to encourage prospective acquirers to negotiate with our Board rather than to attempt a hostile takeover. These provisions include that stockholders do not have the right to act by written consent, rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings, the right of our Board to issue preferred stock without stockholder approval and limitations on the right of stockholders to remove directors. Delaware law also imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding shares of common stock.

We cannot provide assurance that we will continue to pay dividends or purchase shares of our common stock under our stock repurchase program.

There can be no assurance that we will have sufficient surplus under Delaware law to be able to continue to pay dividends or purchase shares of our common stock under our stock repurchase program. This may result from extraordinary cash expenses, actual expenses exceeding contemplated costs, funding of capital expenditures, increases in reserves or lack of available capital. Our Board of Directors may also suspend the payment of dividends or our stock repurchase program if the Board deems such action to be in our best interests or those of our stockholders. If we do not pay dividends, the price of our common stock must appreciate for you to realize a gain on your investment in Wyndham Worldwide. This appreciation may not occur and our stock may in fact depreciate in value.

We are responsible for certain of Cendant’s contingent and other corporate liabilities.

Under the separation agreement and the tax sharing agreement that we executed with Cendant (now Avis Budget Group) and former Cendant units, Realogy and Travelport, we and Realogy generally are responsible for 37.5% and 62.5%, respectively, of certain of Cendant’s contingent and other corporate liabilities and associated costs including certain contingent and other corporate liabilities of Cendant and/or its subsidiaries to the extent incurred on or prior to August 23, 2006. These liabilities include those relating to certain of Cendant’s terminated or divested businesses, the Travelport sale, certain Cendant-related litigation, actions with respect to the separation plan and payments under certain contracts that were not allocated to any specific party in connection with the separation.

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If any party responsible for the liabilities described above were to default on its obligations, each non-defaulting party including Avis Budget would be required to pay an equal portion of the amounts in default. Accordingly, we could under certain circumstances be obligated to pay amounts in excess of our share of the assumed obligations related to such liabilities including associated costs. In accordance with the terms of the separation agreement, Realogy posted a letter of credit in April 2007 for our and Cendant’s benefit to cover its estimated share of the assumed liabilities discussed above although there can be no assurance that such letter of credit will be sufficient to cover Realogy’s actual obligations if and when they arise.

We may be required to write-off all or a portion of the remaining value of our goodwill or other intangibles of companies we have acquired.

Under generally accepted accounting principles we review our intangible assets, including goodwill, for impairment at least annually or when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our goodwill or other intangible assets may not be recoverable include a sustained decline in our stock price and market capitalization, reduced future cash flow estimates and slower growth rates in our industry. We may be required to record a significant non-cash impairment charge in our financial statements during the period in which any impairment of our goodwill or other intangible assets is determined, negatively impacting our results of operations and stockholders’ equity.


ITEM 1B.	UNRESOLVED STAFF COMMENTS

None.


ITEM 2.	PROPERTIES

Our corporate headquarters is located in a leased office at 22 Sylvan Way in Parsippany, New Jersey, which lease expires in 2029. We also have a leased office in Virginia Beach, Virginia for our Associate Service Center, which lease expires in 2019.

Wyndham Hotel Group

The main corporate operations of our lodging business share office space in our corporate headquarters leased by Wyndham in Parsippany, New Jersey. Our lodging business also leases space for its reservations centers and/or data warehouses in Aberdeen, South Dakota; Phoenix, Arizona; and Saint John, New Brunswick, Canada pursuant to leases that expire in 2016, 2017 and 2020, respectively. In addition, our lodging business has eight leases for office space in various countries outside the U.S. with varying expiration dates ranging between 2015 and 2021. Our lodging business also has four leases for office space within the U.S. with varying expiration dates ranging between 2015 and 2020 and a storage facility located in Parsippany, New Jersey that expires in 2017. All leases that are due to expire in 2015 are presently under review related to our ongoing requirements.

Wyndham Exchange & Rentals

Our vacation exchange and rentals business has its main corporate operations at a leased office in Parsippany, New Jersey, which lease expires in 2029. Our vacation exchange business also owns five properties located in the U.S., Ireland, United Kingdom, Mexico and Portugal. Our vacation exchange business also has one other leased office located within the U.S. pursuant to a lease that expires in 2019 and 20 additional leased spaces in various countries outside the U.S. pursuant to leases that expire generally between 2015 through 2017 except for one lease that expires in 2020. Our vacation rentals business’s operations are managed in 28 owned locations (of which 19 are located in the U.S., five are located in Denmark, three are located in the United Kingdom and one is located in Italy), four main leased locations (of which two are located in the U.S., one is located in Denmark and one is located in the Netherlands) and 138 smaller leased offices throughout Europe and the U.S.. The vacation exchange and rentals business also occupies space in London, United Kingdom pursuant to a lease that expires in 2021. All leases that are due to expire in 2015 are presently under review related to our ongoing requirements.

Wyndham Vacation Ownership

Our vacation ownership business has its main corporate operations in Orlando, Florida pursuant to several leases, which begin to expire in 2025. Our vacation ownership business also owns a contact center facility in Redmond, Washington as well as leased space in Springfield, Missouri; Chicago, Illinois; and Las Vegas, Nevada with various expiration dates. Our vacation ownership business leases space for administrative functions in Las Vegas, Nevada that expires in 2018 and in Northbrook, Illinois that expires in 2020. In addition, the vacation ownership business leases approximately 95 marketing and sales offices, of which approximately 93 are located throughout the U.S. with varying expiration dates, and eight offices located in Australia that expire between 2015 and 2019, with the exception of the main corporate operations in Bundall, Australia which expires in 2021.

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ITEM 3. LEGAL PROCEEDINGS

We are involved in various claims and lawsuits arising in the ordinary course of business, none of which, in the opinion of management, is expected to have a material adverse effect on our results of operations or financial condition. See Note 17 to the Consolidated Financial Statements for a description of claims and legal actions arising in the ordinary course of our business and Note 23 to the Consolidated Financial Statements for a description of our obligations regarding Cendant contingent litigation.

ITEM 4. MINE SAFETY DISCLOSURES

None.

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PART II


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

Market Price of Common Stock

Our common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “WYN”. As of January 31, 2015, the number of stockholders of record was 6,085. The following table sets forth the quarterly high and low closing sales prices per share of WYN common stock as reported by the NYSE for the years ended December 31, 2014 and 2013.



2014	High		Low
First Quarter	$	75.74	$	68.62
Second Quarter	75.72		69.43
Third Quarter	82.39		74.82
Fourth Quarter	86.77		71.83



2013	High		Low
First Quarter	$	64.48	$	55.14
Second Quarter	65.26		54.85
Third Quarter	63.71		56.83
Fourth Quarter	73.69		59.36

Dividend Policy

During 2014 and 2013, we paid a quarterly dividend of $0.35 and $0.29, respectively, per share of common stock issued and outstanding on the record date for the applicable dividend. During February 2015, our Board of Directors (“Board”) authorized an increase of quarterly dividends to $0.42 per share beginning with the dividend expected to be declared during the first quarter of 2015. Our dividend payout ratio is now approximately 34% of the midpoint of the range of our estimated 2015 net income after certain adjustments. Our dividend policy for the future is to grow our dividend at least at the rate of growth of our earnings. The declaration and payment of future dividends to holders of our common stock are at the discretion of our Board and depend upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain debt obligations, legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant. There can be no assurance that a payment of a dividend will occur in the future.

Issuer Purchases of Equity Securities

Below is a summary of our Wyndham Worldwide common stock repurchases by month for the quarter ended December 31, 2014:



ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Publicly Announced Plan
October 1 – 31, 2014	943,529	$	77.15	943,529	$	1,113,833,572
November 1 – 30, 2014	501,111	78.79		501,111	1,074,351,825
December 1 – 31, 2014 ^(*)	694,717	84.18		694,717	1,015,968,890
Total	2,139,357	$	79.82	2,139,357	$	1,015,968,890

^(*)Includes 86,695 shares purchased for which the trade date occurred during December 2014 while settlement occurred during January 2015.

On August 20, 2007, our Board authorized our current stock repurchase program that enables us to purchase our common stock. The Board has since increased the capacity of the program six times, most recently on October 22, 2014 by $1.0 billion, bringing the total authorization under the program to $4.0 billion. Under our current and prior stock repurchase plans, the total authorization is $4.8 billion.

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During the period January 1, 2015 through February 12, 2015, we repurchased an additional 0.9 million shares at an average price of $84.65 for a cost of $73 million. We currently have $943 million remaining availability in our program. The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements and other factors. Repurchases may be conducted in the open market or in privately negotiated transactions.

Stock Performance Graph

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

The following line graph compares the cumulative total stockholder return of our common stock against the S&P 500 Index and the S&P Hotels, Resorts & Cruise Lines Index (consisting of Carnival Corporation, Marriott International Inc., Starwood Hotels & Resorts Worldwide, Inc., Royal Caribbean Cruises Ltd. and Wyndham Worldwide Corporation) for the period from December 31, 2009 to December 31, 2014. The graph assumes that $100 was invested on December 31, 2009 and all dividends and other distributions were reinvested.

Cumulative Total Return



	12/09	12/10	12/11	12/12	12/13	12/14
Wyndham Worldwide Corporation	100.00	151.49	194.93	279.39	394.08	467.03
S&P 500	100.00	115.06	117.49	136.30	180.44	205.14
S&P Hotels, Resorts & Cruise Lines	100.00	153.28	123.75	154.92	200.07	248.20

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ITEM 6. SELECTED FINANCIAL DATA



	As of or For the Year Ended December 31,
	2014			2013			2012			2011			2010
Statement of Income Data (in millions):
Net revenues	$	5,281		$	5,009		$	4,534		$	4,254		$	3,851
Expenses:
Operating and other ^(a)	4,061			3,865			3,482			3,246			2,947
Loss on sale and asset impairments	35			8			8			57			4
Restructuring	11			10			7			6			9
Depreciation and amortization	233			216			185			178			173
Operating income	941			910			852			767			718
Other income, net	(7		)	(6		)	(8		)	(11		)	(7		)
Interest expense	113			131			132			140			137
Early extinguishment of debt	—			111			108			12			30
Interest income	(10		)	(9		)	(8		)	(24		)	(5		)
Income before income taxes	845			683			628			650			563
Provision for income taxes	316			250			229			233			184
Net income	529			433			399			417			379
Net (income)/loss attributable to noncontrolling interest	—			(1		)	1			—			—
Net income attributable to Wyndham shareholders	$	529		$	432		$	400		$	417		$	379
Per Share Data
Basic
Net income attributable to Wyndham shareholders	$	4.22		$	3.25		$	2.80		$	2.57		$	2.13
Weighted average shares outstanding	125			133			143			162			178
Diluted
Net income attributable to Wyndham shareholders	$	4.18		$	3.21		$	2.75		$	2.51		$	2.05
Weighted average shares outstanding	127			135			145			166			185
Dividends
Cash dividends declared per share	$	1.40		$	1.16		$	0.92		$	0.60		$	0.48
Balance Sheet Data (in millions):
Securitized assets ^(b)	$	2,629		$	2,314		$	2,543		$	2,638		$	2,865
Total assets	9,679			9,741			9,463			9,023			9,416
Securitized debt	2,165			1,910			1,960			1,862			1,650
Long-term debt	2,888			2,931			2,602			2,153			2,094
Total equity	1,257			1,625			1,931			2,232			2,917
Operating Statistics:^(c)
Lodging
Number of rooms	660,800			645,400			627,400			613,100			612,700
RevPAR	$	37.57		$	36.00		$	34.80		$	33.34		$	31.14
Vacation Exchange and Rentals
Average number of members (in 000s)	3,765			3,698			3,674			3,750			3,753
Exchange revenue per member	$	177.12		$	181.02		$	179.68		$	179.59		$	177.53
Vacation rental transactions (in 000s)	1,552			1,483			1,392			1,347			1,163
Average net price per vacation rental	$	558.95		$	532.11		$	504.55		$	530.78		$	425.38
Vacation Ownership
Gross Vacation Ownership Interest (“VOI”) sales (in 000s)	$	1,889,000		$	1,889,000		$	1,781,000		$	1,595,000		$	1,464,000
Tours (in 000s)	794			789			724			685			634
Volume Per Guest (“VPG”)	$	2,257		$	2,281		$	2,324		$	2,229		$	2,183

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^(a)	Includes operating, cost of VOIs, consumer financing interest, marketing and reservation and general and administrative expenses.


^(b)	Represents the portion of gross vacation ownership contract receivables, securitization restricted cash and related assets that collateralize our securitized debt. Refer to Note 14 — Variable Interest Entities.


^(c)	The impact from acquired businesses have been included from their acquisition dates forward (see acquisition list below).

In presenting the financial data above in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition, Liquidity and Capital Resources — Critical Accounting Policies,” for a detailed discussion of the accounting policies that we believe require subjective and complex judgments that could potentially affect reported results.

ACQUISITIONS (2010 – 2014)

Between January 1, 2010 and December 31, 2014, we completed a number of acquisitions. The results of operations and financial position of such acquisitions have been included beginning from the relevant acquisition dates. Below is a list of our primary acquisitions during that period (not intended to be a complete list):


•	Midtown 45, NYC Property (January 2013)


•	Oceana Resorts (December 2012)


•	Wyndham Grand Rio Mar Hotel (October 2012)


•	Shell Vacations Club (September 2012)


•	Smoky Mountain Property Management Group (August 2012)


•	James Villa Holdings Ltd. (November 2010)


•	ResortQuest International, LLC (September 2010)


•	Tryp hotel brand (June 2010)


•	Hoseasons Holdings Ltd. (March 2010)

See Note 4 to the Consolidated Financial Statements for a discussion of the acquisitions completed during 2014 and 2013.

LOSS ON SALE

During 2014, we sold our U.K.-based camping business at our vacation exchange and rentals business resulting in a $20 million loss. As a result of this transaction, we received $1 million of cash, net, reduced our net assets by $11 million, wrote-off $6 million of foreign currency translation adjustments and recorded a $4 million indemnification liability. Such loss is recorded within loss on sale and asset impairments on the Consolidated Statement of Income.

IMPAIRMENT & RESTRUCTURING CHARGES

During 2014, we recorded $12 million of restructuring costs at our vacation exchange and rentals and lodging businesses targeted at improving the alignment of the organizational structure of each business with their strategic objectives. In addition, we reversed $1 million of previously recorded contract termination costs related to our 2013 organizational realignment initiative.

Additionally in 2014, we recorded a $7 million non-cash charge at our vacation exchange and rentals business related to the write-down of an equity investment which was the result of a reduction in the fair value of an entity in which we have a minority ownership position. We also recorded an $8 million non-cash charge at our lodging business related to the write-down of an investment in a joint venture, which was the result of the joint venture’s recurring losses and negative operating cash flows.

During 2013, we recorded $10 million of restructuring costs, of which $9 million related to an organizational realignment initiative committed to at our lodging business, primarily focused on optimizing its marketing structure. In addition, we recorded $8 million of non-cash impairment charges at our lodging business primarily related to a partial write-down of our Hawthorn trademark due to lower than anticipated growth in the brand.

During 2012, we recorded an $8 million non-cash asset impairment charge at our vacation exchange and rentals business resulting from the decision to rebrand the ResortQuest and Steamboat Resorts trade names to the Wyndham Vacation Rentals brand. In addition, we recorded restructuring costs of $7 million related to organizational realignment initiatives commenced during 2012 at our vacation exchange and rentals and vacation ownership businesses.

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During 2011, we recorded non-cash asset impairment charges at our lodging business which consisted of a write-down of $44 million of franchise and management agreements, development advance notes and other receivables and a $13 million investment in an international joint venture. In addition, we recorded $6 million of restructuring costs primarily related to a strategic realignment initiative committed to during 2010 at our vacation exchange and rentals business.

During 2010, we recorded $9 million of restructuring costs related to a strategic realignment initiative committed to during 2010 at our vacation exchange and rentals business. In addition, we recorded a $4 million charge to reduce the value of certain vacation ownership properties and related assets that were no longer consistent with our development plans.


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

BUSINESS AND OVERVIEW

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


•	Lodging—primarily franchises hotels in the upscale, upper midscale, midscale, economy and extended stay segments and provides hotel management services for full-service and select limited-service hotels.


•	Vacation Exchange and Rentals—provides vacation exchange services and products to owners of intervals of vacation ownership interests (“VOIs”) and markets vacation rental properties primarily on behalf of independent owners.


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

Separation from Cendant

On July 31, 2006, Cendant Corporation, currently known as Avis Budget Group, Inc. (or “former Parent”), distributed all of the shares of Wyndham common stock to the holders of Cendant common stock issued and outstanding on July 21, 2006, the record date for the distribution. On August 1, 2006, we commenced “regular way” trading on the New York Stock Exchange under the symbol “WYN.”

Before our separation from Cendant (“Separation”), we entered into separation, transition services and several other agreements with Cendant, Realogy and Travelport to effect the separation and distribution, govern the relationships among the parties after the separation and allocate among the parties Cendant’s assets, liabilities and obligations attributable to periods prior to the separation. Under the Separation and Distribution Agreement, we assumed 37.5% of certain contingent and other corporate liabilities of Cendant or its subsidiaries which were not primarily related to our business or the businesses of Realogy, Travelport or Avis Budget Group, and Realogy assumed 62.5% of these contingent and other corporate liabilities. These include liabilities relating to Cendant’s terminated or divested businesses, the Travelport sale on August 22, 2006, taxes of Travelport for taxable periods through the date of the Travelport sale, certain litigation matters, generally any actions relating to the separation plan and payments under certain contracts that were not allocated to any specific party in connection with the Separation.

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RESULTS OF OPERATIONS

Lodging

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

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

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

We also earn revenues from the Wyndham Rewards loyalty program when a member stays at a participating hotel. These revenues are derived from a fee we charge based upon a percentage of room revenues generated from such member stays. These fees are intended to reimburse us for expenses associated with administering and marketing the loyalty program. These fees are recognized as revenue upon becoming due from the franchisee. Since we are obligated to expend the fees we collect from franchisees, revenues earned in excess of costs incurred are accrued as a liability for future costs to support the program.

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

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We also provide management services for hotels under management contracts, which offer all the benefits of a global brand and a full range of management, marketing and reservation services. In addition to the standard franchise services described above, our hotel management business provides hotel owners with professional oversight and comprehensive operations support services such as hiring, training and supervising the managers and employees that operate the hotels as well as annual budget preparation, financial analysis and extensive food and beverage services. Our standard management agreement typically has a term of up to 25 years. Our management fees are comprised of base fees, which are typically a specified percentage of gross revenues from hotel operations, and incentive fees, which are typically a specified percentage of a hotel’s gross operating profit. Management fee revenues are recognized when earned in accordance with the terms of the contract and recorded as a component of franchise fee revenues on the Consolidated Statements of Income. We incur certain reimbursable costs on behalf of managed hotel properties and report reimbursements received from managed hotels as revenues and the costs incurred on their behalf as expenses. Such reimbursable revenues are recorded as a component of service and membership fees on the Consolidated Statements of Income. The reimbursable costs, which principally relate to payroll costs for operational employees at the managed hotels, are reflected as a component of operating expenses on the Consolidated Statements of Income. The reimbursements from hotel owners are based upon the costs incurred with no added margin. As a result, these reimbursable costs have no effect on our operating income. Management fee revenues and reimbursable revenues were $11 million and $148 million, respectively, during 2014, $8 million and $129 million, respectively, during 2013 and $7 million and $91 million, respectively, during 2012.

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

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

Vacation Exchange and Rentals

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

Our vacation exchange business derives a majority of its revenues from annual membership dues and exchange fees from members trading their intervals. Revenues from annual membership dues represent the annual fees from members who participate in our vacation exchange business and, for additional fees, have the right to exchange their intervals for intervals at other properties affiliated within our vacation exchange business and, for certain members, for other leisure-related services and products. We recognize revenues from annual membership dues on a straight-line basis over the membership period during which delivery of publications, if applicable, and other services are provided to the members. Exchange fees are generated when members exchange their intervals for intervals at other properties affiliated with our vacation exchange business or for other leisure-related services and products. Exchange fees are recognized as revenues, net of expected cancellations, when the exchange requests have been confirmed to the member.

Our vacation rentals business primarily derives its revenues from fees, which generally average between 20% and 50% of the gross booking fees. For properties which we own, manage or operate under long-term capital and operating leases (which represent less than 10% of our portfolio), we receive 100% of the revenues. The majority of the time, we act on behalf of the owners of the rental properties to generate our fees. We provide reservation services to the independent property owners and receive the agreed-upon fee for the services provided. We remit the gross rental fee received from the renter to the independent property owner, net of our agreed-upon fee. Revenues from such fees that are recognized in the period that the rental reservation is made are recorded, net of expected cancellations.

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Cancellations for 2014, 2013 and 2012 each totaled less than 5% of rental transactions booked. Upon confirmation of the rental reservation, the rental customer and property owner generally have a direct relationship for additional services to be performed. We also earn rental fees in connection with properties which we own, manage or operate and such fees are recognized ratably over the rental customer’s stay, as this is the point at which the service is rendered. Our revenues are earned when evidence of an arrangement exists, delivery has occurred or the services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability is reasonably assured.

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

Vacation Ownership

Our vacation ownership business develops, markets and sells VOIs to individual consumers, provides property management services at resorts and provides consumer financing in connection with the sale of VOIs. It derives the majority of its revenues from sales of VOIs and derives other revenues from consumer financing and property management. Our sales of VOIs are either cash sales or developer-financed sales. In order for us to recognize revenues from VOI sales under the full accrual method of accounting as prescribed in the guidance for sales of real estate for fully constructed inventory, a binding sales contract must have been executed, the statutory rescission period must have expired (after which time the purchasers are not entitled to a refund except for non-delivery by us), receivables must have been deemed collectible and the remainder of our obligations must have been substantially completed. In addition, before we recognize any revenues from VOI sales, the purchaser of the VOI must have met the initial investment criteria and, as applicable, the continuing investment criteria, by executing a legally binding financing contract. A purchaser has met the initial investment criteria when a minimum down payment of 10% is received by us. In accordance with the guidance for accounting for real estate time-sharing transactions, we must also take into consideration the fair value of certain incentives provided to the purchaser when assessing the adequacy of the purchaser’s initial investment. In those cases where financing is provided to the purchaser by us, the purchaser is obligated to remit monthly payments under financing contracts that represent the purchaser’s continuing investment. If all of the criteria for a VOI sale to qualify under the full accrual method of accounting have been met, as discussed above, except that construction of the VOI purchased is not complete, we recognize revenues using the percentage-of-completion (“POC”) method of accounting provided that the preliminary construction phase is complete and that a minimum sales level has been met (to assure that the property will not revert to a rental property). The preliminary stage of development is deemed to be complete when the engineering and design work is complete, the construction contracts have been executed, the site has been cleared, prepared and excavated, and the building foundation is complete. The completion percentage is determined by the proportion of real estate inventory costs incurred to total estimated costs. These estimated costs are based upon historical experience and the related contractual terms. The remaining revenues and related costs of sales, including commissions and direct expenses, are deferred and recognized as the remaining costs are incurred.

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

We also provide day-to-day-management services, including oversight of housekeeping services, maintenance and certain accounting and administrative services for property owners’ associations and clubs. In some cases, our employees serve as officers and/or directors of these associations and clubs in accordance with their by-laws and associated regulations. We receive fees for such property management services which are generally based upon total costs to operate such resorts. Fees for property management services typically approximate 10% of budgeted operating expenses. Property management fee revenues are recognized when earned in accordance with the terms of the contract and are recorded as a component of service and

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membership fees on the Consolidated Statements of Income. Property management revenues, which are comprised of management fee revenue and reimbursable revenue, were $581 million, $567 million and $460 million during 2014, 2013 and 2012, respectively. Management fee revenues were $288 million, $290 million and $225 million during 2014, 2013 and 2012, respectively. Reimbursable revenues, which are based upon certain reimbursable costs with no added margin, were $293 million, $277 million and $235 million during 2014, 2013 and 2012, respectively. These reimbursable costs principally relate to the payroll costs for management of the associations, club and resort properties where we are the employer and are reflected as a component of operating expenses on the Consolidated Statements of Income. During each of 2014, 2013 and 2012, one of the associations that we manage paid Wyndham Exchange & Rentals $19 million for exchange services.

Within our Vacation Ownership segment, we measure operating performance using the following key metrics: (i) gross VOI sales (including tele-sales upgrades, which are a component of upgrade sales) before the net effect of POC accounting and loan loss provisions, (ii) tours, which represents the number of tours taken by guests in our efforts to sell VOIs and (iii) volume per guest, or VPG, which represents revenue per guest and is calculated by dividing the gross VOI sales (excluding tele-sales upgrades, which are a component of upgrade sales) by the number of tours.

Other Items

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

Discussed below are our consolidated results of operations and the results of operations for each of our reportable segments. The reportable segments presented below represent our operating segments for which separate financial information is available and which is utilized on a regular basis by our chief operating decision maker to assess performance and to allocate resources. In identifying our reportable segments, we also consider the nature of services provided by our operating segments. Management evaluates the operating results of each of our reportable segments based upon revenues and “EBITDA,” which is defined as net income before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing interest) and income taxes, each of which is presented on the Consolidated Statements of Income. We believe that EBITDA is a useful measure of performance for our industry segments and, when considered with GAAP measures, gives a more complete understanding of our operating performance. Our presentation of EBITDA may not be comparable to similarly-titled measures used by other companies.

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OPERATING STATISTICS

The following table presents our operating statistics for the years ended December 31, 2014 and 2013. See Results of Operations section for a discussion as to how these operating statistics affected our business for the periods presented.



	Year Ended December 31,
	2014		2013		% Change
Lodging
Number of rooms ^(a)	660,800		645,400		2.4
RevPAR ^(b)	$	37.57	$	36.00	4.4
Vacation Exchange and Rentals
Average number of members (in 000s) ^(c)	3,765		3,698		1.8
Exchange revenue per member ^(d)	$	177.12	$	181.02	(2.2)
Vacation rental transactions (in 000s) ^{(e) (f)}	1,552		1,483		4.7
Average net price per vacation rental ^{(f) (g)}	$	558.95	$	532.11	5.0
Vacation Ownership ^(f)
Gross VOI sales (in 000s) ^{(h) (i)}	$	1,889,000	$	1,889,000	—
Tours (in 000s) ^(j)	794		789		0.6
VPG ^(k)	$	2,257	$	2,281	(1.1)


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


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


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


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


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


^(f)	Includes the impact from acquisitions from the acquisition dates forward, therefore, the operating statistics for 2014 are not presented on a comparable basis to the 2013 operating statistics.


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


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


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



	2014			2013
Gross VOI sales	$	1,889		$	1,889
Less: WAAM Fee-for-Service sales ^(*)	(132		)	(160		)
Gross VOI sales, net of WAAM Fee-for-Service sales	1,757			1,729
Less: Loan loss provision	(260		)	(349		)
Less: Impact of POC accounting	(12		)	(1		)
Vacation ownership interest sales	$	1,485		$	1,379


^(*)	Represents total sales of VOIs through our WAAM Fee-for-Service sales model designed to offer turn-key solutions for developers or banks in possession of newly developed inventory, which we will sell for a commission fee through our extensive sales and marketing channels. WAAM Fee-for-Service commission revenues amounted to $98 million and $107 million during 2014 and 2013, respectively.


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

^(k)

VPG is calculated by dividing Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) by the number of tours. Tele-sales upgrades were $97 million and $89 million during 2014 and 2013, respectively. We have excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel. We believe that VPG provides an enhanced understanding of the performance of our vacation ownership business because it directly measures the efficiency of the business’s tour selling efforts during a given reporting period.

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Year Ended December 31, 2014 vs. Year Ended December 31, 2013

Our consolidated results are as follows:



	Year Ended December 31,
	2014			2013			Favorable/(Unfavorable)
Net revenues	$	5,281		$	5,009		$	272
Expenses	4,340			4,099			(241		)
Operating income	941			910			31
Other income, net	(7		)	(6		)	1
Interest expense	113			131			18
Early extinguishment of debt	—			111			111
Interest income	(10		)	(9		)	1
Income before income taxes	845			683			162
Provision for income taxes	316			250			(66		)
Net income	529			433			96
Net (income)/loss attributable to noncontrolling interest	—			(1		)	1
Net income attributable to Wyndham shareholders	$	529		$	432		$	97

Net revenues increased $272 million (5.4%) during 2014 compared with 2013 primarily resulting from:


•	$123 million of higher revenues at our vacation ownership business primarily resulting from higher net VOI sales;


•	a $78 million increase at our vacation exchange and rentals business primarily resulting from stronger volume and yield on rental transactions; and


•	a $74 million increase at our lodging business primarily from higher royalty, marketing and reservation (inclusive of Wyndham Rewards) revenues and reimbursable revenues in our hotel management business.

Expenses increased $241 million (5.9%) during 2014 compared with 2013 primarily reflecting:


•	$182 million of higher expenses from operations primarily related to revenue increases;


•	a $20 million loss on the sale of a business at our vacation exchange and rentals business;


•	a $17 million increase in depreciation and amortization resulting from property and equipment additions;


•	$15 million of non-cash impairment charges resulting from the write-down of equity investments at our lodging and vacation exchange and rentals businesses during 2014, partially offset by the absence of an $8 million non-cash impairment charge at our lodging business during 2013;


•	a $10 million foreign exchange loss related to the devaluation of the official exchange rate of Venezuela during the first quarter of 2014; and


•	$5 million of expense related to an allowance recorded on an indemnification receivable that was established as a result of the Shell acquisition.

Interest expense decreased $18 million (13.7%) during 2014 compared with 2013 primarily due to the impact of the interest rate swaps entered into during the third quarter of 2013.

During 2013, we incurred $111 million of expenses for the early repurchase of a portion of our 5.75%, 7.35% and 6.00% senior unsecured notes and the remaining portion of our 9.875% senior unsecured notes.

Our effective tax rate increased from 36.6% in 2013 to 37.4% in 2014 primarily due to the lack of a tax benefit from the loss on the sale of our U.K.-based camping business.

As a result of these items, net income attributable to Wyndham shareholders increased $97 million (22.5%) as compared with 2013.

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Following is a discussion of the 2014 results of each of our segments and Corporate and Other compared to 2013:



	Net Revenues							EBITDA
	2014			2013			% Change	2014				2013				% Change
Lodging	$	1,101		$	1,027		7.2	$	327		^(b)	$	279		^(f)	17.2
Vacation Exchange and Rentals	1,604			1,526			5.1	335			^(c)	356				(5.9)
Vacation Ownership	2,638			2,515			4.9	660				619			^(g)	6.6
Total Reportable Segments	5,343			5,068			5.4	1,322				1,254				5.4
Corporate and Other ^(a)	(62		)	(59		)	(5.1)	(141		)	^(d)	(122		)	^(d)	(15.6)
Total Company	$	5,281		$	5,009		5.4	$	1,181			$	1,132			4.3


Reconciliation of EBITDA to Net Income Attributable to Wyndham Shareholders

								2014				2013
EBITDA								$	1,181			$	1,132
Depreciation and amortization								233				216
Interest expense								113			^(e)	131
Early extinguishment of debt								—				111			^(h)
Interest income								(10		)		(9		)
Income before income taxes								845				683
Provision for income taxes								316				250
Net income								529				433
Net (income)/loss attributable to noncontrolling interest								—				(1		)
Net income attributable to Wyndham shareholders								$	529			$	432


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

^(b)

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

^(c)

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


^(d)	Includes (i) $142 million and $121 million of corporate costs during 2014 and 2013, respectively, and (ii) $1 million of a net benefit during 2014 and $1 million of a net expense during 2013 related to the resolution of and adjustment to certain contingent liabilities and assets resulting from our Separation.


^(e)	Includes $2 million for the reversal of a reserve for value-added taxes established during 2011.


^(f)	Includes (i) $9 million of restructuring costs incurred as a result of an organizational realignment initiative commenced during 2013 and (ii) $8 million of non-cash impairment charges primarily related to a partial write-down of the Hawthorn trademark.


^(g)	Includes $2 million of costs incurred in connection with the acquisition of the Midtown 45 property in New York City (“Midtown 45”) through the consolidation of a special purpose entity (“SPE”), which is being converted to WAAM Just-in-Time inventory (January 2013).


^(h)	Represents costs incurred for the early repurchase of a portion of our 5.75%, 7.375% and 6.00% senior unsecured notes and the remaining portion of our 9.875% senior unsecured notes.

Lodging

Net revenues increased $74 million (7.2%) and EBITDA increased $48 million (17.2%) during the twelve months ended December 31, 2014 compared with the same period during 2013. EBITDA was favorably impacted by $8 million of lower restructuring costs during 2014, which were partially offset by $4 million of termination costs associated with the departure of an executive.

Net revenues reflect a $55 million increase in royalty, marketing and reservation fees (inclusive of Wyndham Rewards) primarily due to (i) a 4.4% increase in global RevPAR resulting from an 8.4% increase in domestic RevPAR, partially offset by a 4.4% decrease in international RevPAR and (ii) a 2.4% increase in system size. Such increase in revenues was partially offset by the absence of $11 million of fees charged for the global conference held during 2013, which were fully offset in expenses.

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Other franchise fees and ancillary services increased revenues and EBITDA by $12 million and $15 million, respectively, resulting primarily from our co-branded credit card program.

The increase in net revenues also reflects $19 million of higher reimbursable revenues in our hotel management business which had no impact on EBITDA. Such increase was primarily the result of new management agreements executed during 2014.

Net revenues decreased $3 million and EBITDA was flat from our owned hotels compared to the same period last year due to the impact of renovations at the Rio Mar Hotel.

EBITDA was unfavorably impacted primarily by $29 million of higher marketing, reservation and Wyndham Rewards expenses resulting from the impact of the marketing and reservation revenue increases as we are obligated to spend such revenues on behalf of our franchisees.

As of December 31, 2014, we had approximately 7,650 properties and over 660,800 rooms in our system. Additionally, our hotel development pipeline included approximately 960 hotels and over 116,700 rooms, of which 57% were international and 64% were new construction as of December 31, 2014.

Vacation Exchange and Rentals

Net revenues increased $78 million (5.1%) and EBITDA decreased $21 million (5.9%) during 2014 compared with 2013. Foreign currency translation favorably impacted net revenues and EBITDA by $13 million and $5 million, respectively. EBITDA also reflects (i) a $20 million loss on the sale of our U.K.-based camping business, (ii) a $10 million foreign exchange loss related to the devaluation of the official exchange rate of Venezuela during the first quarter of 2014, (iii) $10 million of restructuring charges primarily targeted at improving the alignment of our organizational structure with our strategic objectives, and (iv) a $7 million non-cash impairment charge related to a write-down of an equity investment. Such unfavorability was partially offset by a $2 million benefit resulting from the reversal of a reserve for value-added taxes established during 2011.

Our acquisition of a vacation rental business contributed $9 million of incremental revenues (inclusive of $2 million of ancillary revenues) and $3 million of incremental EBITDA during 2014.

Net revenues generated from rental transactions and related services increased $79 million. Excluding a favorable foreign currency translation impact of $20 million and $7 million of incremental vacation rental revenues from acquisitions, net revenues generated from rental transactions and related services increased $52 million due to (i) a 3.9% increase in rental transaction volume primarily at our Denmark-based Novasol and Netherlands-based Landal GreenParks businesses and (ii) a 2.6% increase in average net price per vacation rental driven by strength in higher priced accommodations at Landal GreenParks and our U.K.-based James Villa Holidays business, partially offset by lower yield at Novasol. Our U.K.-based camping business, which was sold during the fourth quarter, contributed rental transaction and related service revenue of $34 million and $31 million during 2014 and 2013, respectively.

Exchange and related service revenues, which principally consist of fees generated from memberships, exchange transactions, member-related rentals and other member servicing, decreased $2 million. Excluding an unfavorable foreign currency translation impact of $6 million, exchange and related service revenues increased $4 million primarily due to a 1.8% increase in the average number of members principally resulting from improved retention and growth in new members in North America and Latin America. Such impact was partially offset by a 1.3% reduction in exchange revenue per member primarily resulting from the impact of macroeconomic factors related to Venezuela and Brazil and the impact of growth in club memberships in North America where there is a lower propensity to transact, partially offset by higher exchange yield in North America.

In addition, EBITDA was unfavorably impacted by $36 million of higher costs resulting from revenue increases in our vacation rentals businesses.

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Vacation Ownership

Net revenues and EBITDA increased $123 million (4.9%) and $41 million (6.6%), respectively, during the year ended 2014 compared with 2013. Foreign currency translation unfavorably impacted net revenues and EBITDA by $15 million and $4 million, respectively.

Net VOI revenue increased $106 million compared to the prior year. Excluding an unfavorable foreign currency translation impact of $10 million, net VOI revenue increased $116 million primarily due to an $89 million decrease in the provision for loan losses resulting from favorable default trends in connection with a tightening of our credit standards. Gross VOI sales were flat compared to the prior period resulting from a 0.6% increase in tours offset by a 1.1% decline in VPG. The increase in tour flow reflects our continued focus on marketing programs directed to new owner generation. The decrease in VPG resulted from an increase in the percentage of new owners tours which generally have lower VPG than tours to existing owners. In addition, revenues and EBITDA increased $9 million and $3 million, respectively, related to ancillary marketing activities.

Commission revenues generated by WAAM Fee-for-Service decreased $9 million compared to the prior year as a $28 million reduction in gross VOI sales under WAAM Fee-for-Service was partially offset by higher commission rates earned on such VOI sales. EBITDA increased $1 million primarily due to the higher commission earned on such VOI sales.

Consumer financing revenues increased $1 million. Excluding an unfavorable foreign currency translation impact of $3 million, consumer financing revenues increased $4 million. The increase was attributable to higher weighted average interest rates earned on contract receivables partially offset by a lower average portfolio balance. EBITDA increased $8 million primarily reflecting lower interest expense as a result of a reduction in the weighted average interest rate on our securitized debt to 3.7% from 4.2%, partially offset by $54 million of increased average borrowings on our securitized debt facilities. As a result, our net interest income margin increased to 83% compared to 82% during 2013.

Property management revenues increased $14 million. Excluding an unfavorable foreign currency translation impact of $2 million, property management revenues increased $16 million primarily from higher reimbursable revenues. EBITDA increased $6 million due to lower operating expenses.

In addition, EBITDA was unfavorably impacted by:


•	$69 million of higher sales and marketing expenses primarily due to an increase in costs for tours targeting new owner generation;


•	a $16 million increase in the cost of VOI sales primarily due to the impact on estimated inventory recoveries resulting from a reduction in the provision for loan losses; and


•	a $5 million expense related to a reserve recorded on an indemnification receivable established in 2012 as a result of the Shell acquisition.

Such decreases in EBITDA were partially offset by a $4 million reversal of a reserve established from an acquisition made in a previous year and $3 million of lower acquisition costs.

Corporate and Other

Corporate expenses increased $19 million during 2014 compared to the prior year. Corporate expenses reflected a $1 million net benefit during 2014 and a $1 million net expense during 2013 related to the resolution of and adjustment to certain liabilities and assets resulting from our Separation. Excluding the impact of these items, Corporate expenses increased $21 million primarily due to higher employee related costs, professional fees and information technology expenses.

Corporate and Other revenues, which represents the elimination of intersegment revenues charged principally between our vacation ownership and lodging businesses, decreased $3 million during 2014 compared to 2013.

Table of Contents

OPERATING STATISTICS

The following table presents our operating statistics for the years ended December 31, 2013 and 2012. See Results of Operations section for a discussion as to how these operating statistics affected our business for the periods presented.



	Year Ended December 31,
	2013		2012		% Change
Lodging
Number of rooms ^(a)	645,400		627,400		2.9
RevPAR ^(b)	$	36.00	$	34.80	3.4
Vacation Exchange and Rentals
Average number of members (in 000s) ^(c)	3,698		3,674		0.7
Exchange revenue per member ^(d)	$	181.02	$	179.68	0.7
Vacation rental transactions (in 000s) ^{(e) (f)}	1,483		1,392		6.5
Average net price per vacation rental ^{(f) (g)}	$	532.11	$	504.55	5.5
Vacation Ownership ^(f)
Gross VOI sales (in 000s) ^{(h) (i)}	$	1,889,000	$	1,781,000	6.1
Tours (in 000s) ^(j)	789		724		9.0