Well, this is going to be the last fireside of the day. Who better to round it out than Hilton Grand Vacations and President and CFO, Dan Mathewes. Dan, thanks for doing this. No, thanks for having me. Really appreciate it. Just from a long-term standpoint, you've articulated an algorithm, people always use algorithm, for consistent top-line growth. You've got growing faster, and strong free cash flow conversion. What are some of the major puts and takes to think about within that as we look at 2026 and the guidance that you've outlined? I think it's 8% at the midpoint after you raised your expectations after 1Q, versus the kind of typical algorithm. Is 2026, would you say, a kind of normal year? No, 2026 is definitely not a normal year. I think when you roll into 2027, that's when we get to a more normalized algorithm. I think when you think about Hilton Grand Vacations, I think it's a very interesting time for us. This year, we're lapping the launch of HGV Max to the Bluegreen organization that we launched November 8th of 2025. Relatively tough comps the first three quarters, and then returning to growth into Q4 when you think about it from a VPG perspective. Also, just from an organization standpoint, over the past five or six years, we've acquired two organizations, had a very robust inventory spend, and coupled with a heavy level of integration work. When you think about the organization today, the company's almost tripled its size, more stable environment. We're in an environment where the inventory spend is coming down materially from the neighborhood of $400 million to closer to $300 million. In addition to that, integration spend, which last year was roughly $200 million, is coming down to $150 million. Next year, it will drop to $75 million and then completely disappear. This return to algorithm, as well as a substantial source of cash flow from less investment in both inventory and integration, I think is pretty meaningful. I think it's a good time to look at HGV. Yeah, inflection in free cash flow sounds good. When you think outside of just the financials, what are some of the core differences that you would describe or ascribe to Hilton Grand Vacations versus others in the timeshare industry, or even if you look maybe more broadly at the lodging ecosystem? Sure. Look, I would like to think about it more of the vacation space in general. When you think about our product, I think we're uniquely positioned. People constantly, or at least in the last year, I mean, the rhetoric about the K-shaped economy has been fairly robust, and our product is uniquely positioned to allow you to modulate between the high arc or the low arc. If it's a great year, you have the ability to lie-flat all the way to Hawaii, stay in a great resort, go out to eat every night, spend money on every shore excursion you possibly can think of, and spend that $40,000 family vacation. At the same time, if it is not that robust of a year for you and you're an existing owner, you can drive to Myrtle Beach, you can use the kitchen. 90% of our units have kitchens. Use the kitchen, have a very economical stay, sit by the swimming pool or the beach, have a great time. You can do that year after year without changing your ownership whatsoever. The value proposition and the flexibility and the optionality that our product provides, I think puts us in a unique perspective within the industry itself, vacation industry itself. Within the industry, I think we're able to capitalize on our Ultimate Access, our experiential programs that we have out there to really provide a unique offering to our owner base. That all sounds good. We've went through the algorithm, free cash flow inflection, getting at the top of the K-shape, we can kind of pivot between different brands. What keeps you up at night, or what do you think are the general risks or competitive threats that you try to think about facing the business and work around? Naturally, I think people think about sales, right? I think as investors, they naturally look, what is sales going to do? I would tell you that our sales force is the best in the industry, and it's amazing what they can produce. When people ask me what keeps me up at night, it's really more tour flow than anything else. Where are those leads going to come from? We have an amazing partnership with Hilton. The partnership is 100% variable, so what is good for us is good for them. When we come with an idea that will help drive tour flow from that partnership, they are all ears. We are also looking to expand partnerships. With the acquisition of Bluegreen, we acquired a JV with Bass Pro. We also acquired a sales and marketing agreement with Bass Pro. We're in virtually every Bass Pro store out there. That provides us another touchpoint with the consumer. This one, not a call transfer program, which is very much akin to what we have with Hilton, but a opportunity to see people face to face. Yeah Sell them a package. Which is also very consistent with the program that we run with Hilton. If you go to a Hilton in a location where we're now located, in some cases it's locations that we do have product. If you go to the concierge, it's not unlikely that at some point during that conversation, after they help you getting a dinner reservation or whatever it might be, that they will attempt to sell you a package. That's because that's a Hilton Grand Vacations employee sitting in a Hilton hotel, driving another touch point with you. We have other partnerships that are meaningful. Japan Airlines. Yeah Hawaiian Airlines through Alaska Airlines now, also Great Wolf. Really expanding the opportunity to drive tour flow, in particular new buyer tour flow, to get more people into the system. That's a real focal point that we've had in our DNA, so to speak. I think you're a little over 70% existing owners in terms of contract sales currently. What is the right mix? As you're thinking about that tour flow, should we anticipate that you're going to go after more of these partnerships or is it more about monetizing what you have? A combination of both. When you think about the mix, we would be happier with a mix of new buyers approaching 35% versus the 30% that we sit today. From a tour flow growth perspective, we are always looking for opportunistic partnerships that make sense on both ends. Again, we will look to monetize our existing owner base where it makes sense. A great example of that is the recent transaction that we did with Blackstone, where we acquired Elara. That came with 38,000 owners who had a lot of equity in that project itself. In Elara, there was $1.9 billion worth of equity in that fee-for-service deal. With the closing of that transaction, those owners now have the ability to upgrade out, and just as importantly, we have owners outside of that ecosystem that can upgrade in. Holistically, it creates an interesting environment for us. That's just another focal point of us. Do you generally view that as a better return profile than greenfield development? Are there other opportunities that look like that that are out there that you could pursue? That particular relationship, we had structured the deal to always allow us to step in and buy the tail of that inventory. That transaction, we stepped into that transaction back in 2011. We own 25% of the entity, they own 75%. As you can imagine, Blackstone is, while they were in the business of timeshare using our name as a brand name, being in timeshare in perpetuity is not their core business. It naturally made sense for us to step in and buy that. Are there other opportunities like that? We do have other fee-for-service partners that we would probably look to buy out. Just given where they are in their life cycle, it's probably five, seven years away before we'd consider it. Okay. There's a little bit of runway. A lot of runway. Today, fee-for-service makes up a dramatically smaller piece of our business than it did pre-COVID. Pre-COVID, it was closer to 50%. Today, prior to the Elara transaction, it was just under 20%. Post Elara transaction, it'll be in the low double digits. Are there opportunities to improve costs or even conversion rates as we think about existing versus new buyers? Yeah. No, absolutely. That's part of some of the initiatives that we've honed since the acquisition of Diamond in particular. I think this speaks heavily to Ultimate Access. Ultimate Access is the experiential platform that we are using to curate and drive higher owner demand. Effectively, we provide an opportunity for owners to have a great experience, and when people come and stay with us and have a great experience, they tend to buy more. The VPGs on owners that tour that have experienced an Ultimate Access significantly outperform owners who tour who have not come on the experiential platform. Is there an upper bound in terms of how many upgrades you can have in the system or how to think about where you are in that life cycle of upgrades? Sure. There's always a balancing act. At some point, you can sell a timeshare to someone to the point where it just doesn't economically make sense. Yeah. We try to be very cognizant of that. We're trying to sell a balance. When you come in, we cannot dictate what you're going to buy. We try to analyze what your position is in our particular ecosystem, what your likes are, what your dislikes are, and we sell you what we believe is the most opportune product for you. In many cases of an owner, an experienced owner, they know exactly what they want to buy, and we're happy to provide that. How would you characterize the demand environment today? There's a lot of questions and concerns around fuel prices, interest rates, et cetera. Is that spilling over? I realize you're at the higher end of the K-shape. There's probably some exposure to, as you said, higher airfare. What are you seeing from a demand environment now, and then how might that compare as you think about it longer term? Sure. From a demand environment, what I would tell you is I think the acquisitions of both Diamond, and to a lesser degree Bluegreen, have been very helpful from a risk perspective, in particular on oil price. When I think about it and I think about oil going, pick your mark, gas going from $3 a gallon to $5 a gallon. Is that impactful? I think it is. I'm not trying to be tone deaf to it. I am a big believer in the fact that if prices go up $2 per gallon, does that change your decision to take a vacation, in particular, to a drive-to market? I think the answer is no. We're fortunate that about 70% of our owners live within a four-hour drive of one of our properties, which I think is very helpful. Does it change your perspective? Does it allow you to modulate, to get back to that first comment that we were talking about, to change your perspective on do I go to Hawaii versus do I go to Gatlinburg or Virginia Beach or Myrtle Beach? Maybe. It's all about optionality, and that's why we think we're- One of the other announcements that you had was around inventory optimization, this is something that one of your peers has also talked to. I guess there's a little bit of a back and forth that I think about. One is that this has been a segment, when you think about club management that has been viewed as high visibility recurring. Sure. At the same time, we're removing some of these from the base. It seems like it's a positive from an EBITDA standpoint. Help us understand kind of what drove that review, and how you think about maybe the ideal portfolio composition from here. Well, I think when you look at Hilton Grand Vacations over the last five years, we've been dealing with a lot of integration with the two acquisitions, right? Part of that narrative that we've had since the beginning of the acquisition of Diamond is acquired 92 resorts. Diamond was a culmination of, I believe, roughly 12 acquisitions. Not all of those resorts were of the same stature. Not all of those resorts were going to be rebranded. Yeah. We've always talked about almost a couple of dozen not being rebranded. Some of those, due to the fact that they just need the investment required to put the Hilton brand on that, just did not make sense financially from our perspective. When we had a chance to breathe, started doing a little bit more focal work on the inventory portfolio, and the first thing we did was, okay, let's look at properties that from a cash flow perspective, negative. Rental combined with the resort management fee cannot offset the developer maintenance fees. Do we have any of those negative properties? Are they branded Hilton or are they not branded Hilton? If they're not, move up the chain on a decision point. Is there a potential for a special assessment for those who actually do own those properties? Because in that kind of scenario, it doesn't really behoove them as well, those individual owners. Is it a property that is highly utilized by our owner base? If not, you also move up that decision. We identified eight resorts that were kind of, lack of a better term, low-hanging fruit, the easy ones to identify. We've entered into an agreement with a third party to step into our shoes and ultimately sell those. Now, to avoid any confusion, this is not a growth strategy. This is truly an inventory optimization strategy. Cash flow beneficial to us, ultimately beneficial to owners. No special assessment. They're not being heavily utilized. Trying to maximize the experience for everybody involved. Again, these are properties that were not rebranded already and had no plans for future rebranding. It's a specific subset when it comes to our particular position. Talked about having some of the best sales folks in the industry. There's been some commentary back and forth about, A, is there peers that are trying to be more aggressive with getting salespeople, and are you seeing that impact your retention metrics, or are you seeing any change in compensation structure associated with sales folks in the industry? Are they in the room here? They are here somewhere at the conference. There has been one competitor. Raise your hand. Yeah, exactly. There's been one competitor who's been very vocal about it. Look, what I would tell you is you can walk through any of our sales centers, and you'll find individuals who've worked for Travel + Leisure Co., who've worked for Marriott Vacations Worldwide. I'm sure the same is if you walk through. Do we want to protect and do we want to retain our best salespeople? Without a doubt. Will we take initiatives to do so? Of course, we will. At the end of the day, ultimately, you see movement across the spectrum any given day. Something that we focus on, of course, but it's normal for us. You talked to trying to drive incremental new tour flow, new owner flow. How have distribution channels changed over time, and are there new ways that you're thinking about trying to go after the new owners or that you see as the biggest opportunities to improve? I think that goes back to our earlier conversation around driving new partnerships, etcetera. If you want to focus on one of the most important partnership we have, which is with Hilton. If you go back to 2008, and progressed nicely through the time frame, but just call transfer program with Hilton was very robust. Yeah. A game changer in the industry, without a doubt. I'd also, if I were to wager, I'd imagine everybody in this room, when's the last time you actually called a hotel? It's probably a lot fewer today than it was five years ago, definitely 10 years ago, et cetera. How do you capture those call transfers? Some of those methods are going to new forms or digital, focused on that. Other ways, looking at different ways to attack the same footprint. Back in 2015, we were not doing field package sales with Hilton. That's where we sit as their concierge. You enhance programs like that to maximize package sales as well as the partnership program. Follow-up to the making a call to a hotel, which is when was the last time anybody has called a hotel and not had to say, "Representative," almost immediately to try to get a human on the phone very quickly. Maybe turning to margins, what are the primary opportunities, both near term and long term, to improve the real estate contribution margins as we think about cost of product versus marketing versus other costs? Well, I think when you think about our inventory strategy going forward, you contrast that sharply to where we were in 2017 and 2018. At that point in time, we were an organization that did about $400 million in EBITDA. We had an inventory program that at the time, in 2018, we made a commitment to about $1.8 billion in inventory, all through construction and/or conversion. What you see us focus on very much today is looking for very capital-efficient. It doesn't mean that we're going to focus only on recaptured inventory, although that will be a very large component going forward. We still do new builds or conversions. One excellent example of that is a property that we've entered into an agreement with in Nashville. We've structured it. It's a just-in-time transaction where we can match cash inflows and outflows based on demand that we see for the product. In this particular instance, we've also built in additional flexibility in where we can take that inventory as early as 2028 or defer it all to 2033. Having that kind of flexibility, again, focus on the recaptured inventory also drives a lower cost of product. Recaptured inventory, generally speaking, will have a cost of product in the neighborhood of 5%. Depending on certain nuances, it could be maybe just south of 10%, but it's in that ballpark. Yeah New construction, which typically speaking, in our experience, has been closer to 25% to even as high as 30%. What's like the natural churn of the owner base at this point? If you look at our annualized default rate, it's meaningfully higher than it was prior to acquisition, but that's very consistent with what the acquisitions were meant to accomplish. We have an entry price point now, which is clearly geared towards a lower net worth, a lower household income demographic. That also comes with a higher delinquency and a higher default rate. It's part of the business. When you think about the natural churn, I think about the annualized default rate. Prior to any acquisition, it was as high as 6%, and today it's just slightly over 10%. That, you have a large percentage of your owners who've already paid off. Oh, yeah. For sure. That it's a smaller percentage. Including just the natural attrition. The natural attrition with legacy HGV was in the neighborhood of 2% to 3%, and it's probably north of 5% plus with the acquisitions. That you get to recapture. Yeah. Okay, fair enough. On that front, just to remind the audience, we are in a period of accelerated recapture right now, just because during COVID, both Diamond and to a lesser degree, Bluegreen, paused their recapture. We are catching up on those that were halted. That's helpful. Since you're talking about defaults, let's turn to the financing portfolio a little bit. There's been some debate, it seems like, over the trend line of delinquencies. Even, I think, investors might be reading The Wall Street Journal and hearing about delinquencies for credit cards moving higher. Sure. What are you seeing in your portfolio that helps you think about the health of the consumer and the health of the financing receivables? When you look in the environment today, I think you see a lot of strength in the consumer, more so than I think you would've assumed you would've seen given all the dynamics that are going on today. Construction is strong. Unemployment is still low. We, as we talked about on our last call, we saw delinquencies. Typically, what we look for to be a leading indicator of future performance is that 30- to 60-day bucket. We saw those stable to even improving year-over-year. We saw our annualized default rate year-over-year improve, modestly, but an improvement nonetheless. We see strength. We also are very focused on improving the underlying dynamics of that portfolio. During the course of the last 12 months, we've actually changed our underwriting practices to enhance the equity at the table. It's been more? It's been more. Yeah. Not uncommon in the industry. There was a program that Bluegreen was running where they allowed people to upgrade without any additional equity down. We eliminated that late last year, Q2, and we're now requiring additional equity down. Slippery slope with no equity down. It's a slippery slope. You definitely see an increase in defaults. You'll see optics on the contract sales, but we'll pay for it later. You could delve into free cash flow potential. Exactly. Really requiring that extra equity down has helped us. In fact, cash down at the table for Bluegreen is 50% higher than where it was in 2024. Wow. With that all in mind, I guess there's the legacy portfolio, the new portfolio where you're changing things versus where it was before. What is the implication then for what the right kind of provision is for this combined portfolio and how that might evolve over time? I think if you looked at the three companies separately and just did the math that what would the weighted average loan loss provision be on a forward basis or on an annualized basis rather, you would've seen that the combined entity would probably be close to 20% ±. Given the changes in the underwriting practices that we've made at both Diamond and Bluegreen, coupled with some enhancements from a sales practice standpoint. Yeah We feel that the appropriate loan provision is that mid-teen. Great. You also articulated a financing optimization program where you're going to be targeting a 70%, 80%, I believe, securitization of receivables. Just remind us of how that structure works, what drove the change there, and how it impacts liquidity and access to cash. Yeah. No, but we had historically, at Hilton Grand Vacations, not been as robust of an ABS issuer as some of our competitors. That started to change at the time of spin, and we've got a very robust platform now. Even today, we've been one of the innovators, in particular with, you probably saw last year, we introduced timeshare securitizations to the Japanese financial market. It was effectively creating a new financial instrument in Japan. It was a healthy offering, JPY 9.5 billion, or billion JPY. $85 million. Sounds better when you say it in JPY. Yeah. The interest rate is extremely favorable to the U.S. The interest rate on that deal is 1.4%. The most recent transaction that we did in the U.S., it was a $500 million deal in April, and that was at 5.13%. Clearly the interest rate arbitrage is on that front. I'm sorry, I think I dodged your question completely. No, no. How does that why? Oh, the finance business optimization. We're much more of a serial issuer today. Yeah Than we were, and we're actually at 70%, a little north of 70% of people securitized today. It was really trying to annualize that, where we're consistently at that level. We've used that cash to fund integration as well as share repurchases. We're effectively at that run rate, and by the end of the second quarter, we'll have that fully finalized. Clearly you can get a little bit more consistency in terms of- Exactly Tapping that cash flow. Is there any change in terms of how to think about the cyclicality of your free cash flow then because of this? Does this actually reduce cyclicality? In the long term, it ultimately will. In the short term, you still have a nuance in between timing. Is there any cost differential for this relative to just tapping the- Yes. There is. That's why we indicated when we originally launched this, that this would cost us around $25 million. Going back to the Japan comment, because that's a lower cost structure. One, do you have to hedge that? Two, is that something that you'll pursue simultaneously with this, and there's still opportunity to continue to build on it? There's still an opportunity to build on it. We have about 75,000 owners in Japan, so we're well-positioned to do that. What I would tell you is it's a bit of a competitive advantage today, being able to tap that market, but that's not what we want it to be. We really want our pure set in group issue securitizations in Japan. The more liquidity, the more knowledge about the product, the healthier it will be for all of us. That being said, we recognize we have to be the pioneers, just given our structure versus our competitive set. We'll be back in the Japanese market this year. We're changing the structure of the original transaction. The original transaction was Japanese owners and borrowers with Japanese asset backing that facility. The next deal will be Japanese owners that have Japanese collateral as well as U.S. collateral. Ultimately, we're looking to bring in U.S. borrowers and U.S. collateral into that mix too. By the time we do the third or fourth deal, hopefully some of our competitors will be coming into the market too. The more liquidity, the better. We're very excited about the opportunity. Great. We haven't touched on the rental side of the house yet. Still running at a loss on that segment specifically. It used to be positive, I know there's been some changes in terms of the dynamics there. What should we be thinking about in terms of the trajectory of that business? What could profitability look like? We're even getting to breakeven. Yeah. No, we're focused on getting to breakeven at this point. Most of the loss is associated with the developer maintenance. Right. Things like asset dispositions will help optimize that. The true driver of that is really selling through the available inventory that we have available for sale. That lowers, obviously, our obligation and becomes the owner's obligation. That's what will drive that. Other elements that will help that is rebranding some of the properties. We're still in the process of rebranding some of the Diamond properties to Hilton. Those are predominantly European based. When we put the Hilton name on a property, we see an ADR lift. We also see a benefit from the cost side. We'll move away from OTAs and typically move towards hilton.com. That has a lower cost structure for us. That all goes through the rental side of things. We acquired 50 properties with Bluegreen. To date, we've only rebranded 11. I think we're on number 12 now. There's still a lot of work to do on that front too. I would look for the rental business to still run at a loss this year and probably next as well. It's really the developer maintenance obligation that pulls that loss more so than anything. What's the potential timing on additional conversions? How many conversions do you think you have left, and what's the decision process? Conversions from? Sorry, converting to Hilton brands. We will continue to convert to the Hilton brand through all of 2027, and a few properties will slip into 2028. There's several dozen left to go. Okay. That sounds like that's one of the big swing factors for the rental. It's one of the swing factors. The biggest swing factor is the amount of inventory we have available. Look, when we acquired Diamond, we walked in with eyes open and we knew we acquired excess inventory, four years of excess inventory. It takes selling through that and optimizing the inventory too. What is your current owner occupancy and rental occupancy? When you look at our annualized occupancy rates, generally speaking, assume a resort has occupancy of 85 points. Owners will account for about 50 points of that 85 points. Out of the 35 points left, I oversimplify it a bit, but roughly half are going to be associated with marketing packages, assuming it's a property with a sales center, and the other half is basically FIT, typical hotel rental. What do you think is optimal occupancy for both? No, I think that is where we're running. Oh, you think you're already there? You could tweak it perhaps to a little bit more owner to drive owner sales, but it ebbs and flows between 45 and 55. Okay. It depends on the market. Some markets without a sales center, you'll have more opportunity to rent rooms, but at the same time, if it's a desired location, you want to make sure the utility of the owner is there as well. You just talked about this, reduction in inventory, selling through the inventory over time. What's the right level? You kind of talked about this at the very beginning. Thinking about maintenance, inventory spend, we look long term. We believe to support $3.5 billion in contract sales and growing, that that $300 million mark on average is probably where we would expect it. Again, is obviously materially lower than where we were in 2018 and with a dramatically smaller entity at the time, and clearly lower than where we've been in the past few years. Turning to artificial intelligence has been a topic across this entire conference. How do you think about what the implications are for your business, and what are the ways that you're trying to leverage AI to either drive revenue, drive margins, and which is a bigger opportunity? I think there's opportunities on both fronts. Which one to talk about first? Part of it is also just lowering the friction with our owners, maintaining maximum utility of the product. What I would tell you is, we're making a lot of investments. Part of the integration that we're doing, a lot of that investment is associated with technology infrastructure. While this is an example that I've probably given for about a year because I think it's very meaningful, but a year ago, if you logged into our website and you wanted to go to Orlando the week of July 15th, you type it in, it would say, "Okay, booked. You can't go." Then you would have to randomly find a location. Today, if you do the same thing, it gives you, "On July 15th, you have X number of points. Here's your top three suggestions. The next opportunity is going to be, hey, we also have access to your Hilton Honors database. Right. We know where you travel. Yeah. We should be able to ascertain what is for vacation, what is for work travel. Those start to populate in recommendation. At some point in time, assuming people opt in, we'll have access to social media. Steven loves to golf. Properties with golf courses start to populate. It's elements like that that help drive utility, for the owner, which I think will help decrease default rates, which will be hugely meaningful. There's clearly the opportunity on the cost side as well. What does a chatbot do today versus what does it do next week? How can you maximize that? I think it'll be a bit of an evolution, because I think to your point, you mentioned it earlier, how many people call and immediately say, "Agent," try to get to a real person, right? Now, with AI handling some of the calls where you may very well be able to tell the operator is an agent, but they're actually being productive and solving a problem. I think the evolution you'll see is people being more willing to call in because their answers are being responded to, which will drive demand for that call, which will allow real people to handle the more complicated problems until such time AI can handle it all. There will be efficiencies over time. I think it's an evolution. Awesome. We're just about at time unless anybody wants to throw in a question. Brave souls. All right. Well, please join me in thanking Dan, and all of his insights on Hilton Grand Vacations. Thank you. Thanks. Appreciate your time. They're good. Yeah, my kids are great.