Annual report pursuant to Section 13 and 15(d)

Variable Interest Entities

v3.22.4
Variable Interest Entities
 12 Months Ended
Dec. 31, 2022
Variable Interest Entity, Primary Beneficiary, Does Not Hold Majority Voting Interest, Disclosures [Abstract]  
Variable Interest Entities Variable Interest Entities
The Company analyzes its variable interests, including loans, guarantees, SPEs, and equity investments, to determine if an entity in which the Company has a variable interest is a VIE. If the entity is deemed to be a VIE, the Company consolidates those VIEs for which the Company is the primary beneficiary.

Vacation Ownership Contract Receivables Securitizations
The Company pools qualifying VOCRs and sells them to bankruptcy-remote entities. VOCRs qualify for securitization based primarily on the credit strength of the VOI purchaser to whom financing has been extended. VOCRs are securitized through bankruptcy-remote SPEs that are consolidated within the Consolidated Financial Statements. As a result, the Company does not recognize gains or losses resulting from these securitizations at the time of sale to the SPEs. Interest income is recognized when earned over the contractual life of the VOCRs. The Company services the securitized VOCRs pursuant to servicing agreements negotiated on an arm’s-length basis based on market conditions. The activities of these SPEs are limited to (i) purchasing VOCRs from the Company’s vacation ownership subsidiaries, (ii) issuing debt securities and/or borrowing under a conduit facility to fund such purchases, and (iii) entering into derivatives to hedge interest rate exposure. The bankruptcy-remote SPEs are legally separate from the Company. The receivables held by the bankruptcy-remote SPEs are not available to creditors of the Company and legally are not assets of the Company. Additionally, the non-recourse debt that is securitized through the SPEs is legally not a liability of the Company and thus, the creditors of these SPEs have no recourse to the Company for principal and interest.

The assets and liabilities of these vacation ownership SPEs are as follows (in millions):
As of December 31,
2022 2021
Securitized contract receivables, gross (a)
$ 2,164  $ 2,061 
Securitized restricted cash (b)
83  84 
Interest receivables on securitized contract receivables (c)
17  17 
Other assets (d)
25  4 
Total SPE assets 2,289  2,166 
Non-recourse term notes (e)(f)
1,545  1,614 
Non-recourse conduit facilities (e)
428  320 
Other liabilities (g)
5  2 
Total SPE liabilities 1,978  1,936 
SPE assets in excess of SPE liabilities $ 311  $ 230 
(a)Included in Vacation ownership contract receivables, net on the Consolidated Balance Sheets.
(b)Included in Restricted cash on the Consolidated Balance Sheets.
(c)Included in Trade receivables, net on the Consolidated Balance Sheets.
(d)Primarily includes deferred financing costs for the bank conduit facility and a security investment asset, which is included in Other assets on the Consolidated Balance Sheets.
(e)Included in Non-recourse vacation ownership debt on the Consolidated Balance Sheets.
(f)Includes deferred financing costs of $18 million as of both December 31, 2022 and 2021, related to non-recourse debt.
(g)Primarily includes accrued interest on non-recourse debt, which is included in Accrued expenses and other liabilities on the Consolidated Balance Sheets.

In addition, the Company has VOCRs that have not been securitized through bankruptcy-remote SPEs. Such gross receivables were $747 million and $758 million as of December 31, 2022 and 2021. A summary of total vacation ownership receivables and other securitized assets, net of securitized liabilities and the allowance for loan losses, is as follows (in millions):
As of December 31,
2022 2021
SPE assets in excess of SPE liabilities $ 311  $ 230 
Non-securitized contract receivables 747  758 
Less: allowance for loan losses 541  510 
Total, net $ 517  $ 478