$33.56
$188.86
bear $33.56
base $130.92
bull $188.86
margin of safety $65.00
market price* $64.59
Travel + Leisure Co. is the world's largest vacation-ownership (timeshare) company by number of owners and resorts, with 797,000 owner families and more than 280 club resorts, and $4,021 million of 2025 revenue. It has two businesses. Vacation Ownership sells and finances vacation-club interests (Club Wyndham, WorldMark, Margaritaville Vacation Club and other brands) and is paid to manage the resorts for the owners. Travel and Membership is mainly RCI, the timeshare exchange network, which depends on other developers for new members and has been shrinking. The engine is the existing owner base: upgrades sold to people who already own made up 72% of net timeshare sales in 2025, up from 68% in 2024. How we measured earnings. The company lends to most of its buyers and funds those loans through non-recourse securitizations. We treat growth in that loan book like working capital, but we count the loan-loss provision as a real cost ($484 million in 2025, up from $432 million in 2024 and $348 million in 2023), because it becomes cash losses as buyers default. We also subtract stock compensation and the capital spending needed to keep the business running. On that basis, owner earnings after all interest were about $483 million in 2022, $479 million in 2023, $480 million in 2024 and $475 million in 2025. The 2025 figure adds back a one-time, non-cash write-down of $216 million under the resort optimization program, in which the company is exiting or shrinking resorts that needed heavy reinvestment. How we treat the debt. About $2.1 billion of debt is non-recourse securitization debt: notes sold against pools of customer loans, repaid from those customers' payments, with no claim on the company itself. That is the funding for the lending business, so its interest stays inside earnings and we neither subtract that debt nor add the customer loans behind it. The other $3.70 billion (June 30, 2026) is ordinary corporate debt: secured notes, a term loan and a revolving credit line. We value the business before paying its corporate lenders by adding back the cash interest paid on that debt ($189 million in 2022, $239 million in 2023, $245 million in 2024 and $213 million in 2025). On that basis the business earned about $672 million, $718 million, $725 million and $688 million. We start from the median, about $703 million, or about $11.09 per share on today's 63.4 million diluted shares. We use 2022-2025 because these are the years after the pandemic disruption and reflect today's mix of businesses and today's credit costs. Against this, the company owes $3.70 billion of corporate debt and holds $282 million of cash, net debt of about $3.42 billion or $53.91 per share. Its notes carry coupons of 4.50% to 6.125% and the term loan about 6.9%, so on average the debt costs close to our 6% yardstick and we make no cost adjustment in the base and bull cases. Shareholders' equity is negative, a deficit of about $1.0 billion, the result of years of buybacks funded partly with debt, so there is little balance-sheet cushion. Recent trend and the first year. Before corporate interest, earnings fell about 5% in 2025. The base case assumes about 4% growth in the first year, to about $11.53 per share, for reasons visible in the filings: capital spending jumped to $117 million in 2025 from $81 million in 2024, the year the company moved into its new Orlando headquarters, and fell to $44 million in the first half of 2026 from $58 million a year earlier; revenue rose 3.7% in the first half of 2026. Against that, the loan-loss provision rose to $141 million in the second quarter of 2026 from $128 million a year earlier, growing faster than revenue. Base case (about $130.92 per share). After the first year, earnings before corporate interest stay flat in dollars at about $11.53 per share through year 10. That is what the business has actually done since 2022: gains at Vacation Ownership have been offset by RCI's decline and rising credit costs. After year 10 we hold the Vacation Ownership part, about 90% of earnings, flat indefinitely and fade the RCI remainder to zero over 15 years. Holding Vacation Ownership rests on structural features in evidence today: owners pay annual maintenance fees, the company is paid to manage their resorts, and upgrades to existing owners are a sales engine that has run for decades. The owner base has been drifting lower, which is why we credit no growth. The business is worth about $184.83 per share in this case, of which about $84.88 comes from the first ten years. It owes about $53.91, leaving about $130.92. Bear case (about $33.56). Credit costs keep creeping up and RCI keeps shrinking, so earnings before corporate interest slip 3% in the first year, to about $10.76 per share. A recession then arrives. We take its shape from the company's own 2020 record, when owner earnings swung from $6.63 per share in 2019 to a loss of $2.26, but assume resorts stay open, so the trough is less severe: earnings before corporate interest fall to about $4.00 per share in year two, still above the roughly $3.50 per share of corporate interest, then recover to $5.50, $8.00 and $9.50 over the following three years. They then drift down 1.5% a year as RCI erodes and resort write-downs recur, reaching about $8.81 in year 10, and fade to zero over the next 20 years as the owner base ages without enough new buyers. The recession lands on the company's maturities: $400 million of 6.00% notes due April 2027, and about $1.85 billion due between December 2029 and March 2030 (the $854 million term loan, the $650 million 4.50% notes and the $350 million 4.625% notes). In this case those are refinanced at about 9%, the rate a lower-rated borrower pays in a downturn, adding about $321 million, or about $5.07 per share, to what is owed. The business is worth about $92.54 per share in this case; it owes about $58.98 including that refinancing cost, leaving about $33.56. Bull case (about $188.86). Capital spending settles back, the resort program lowers the fees the company pays on unsold inventory, credit losses stop rising, and upgrade sales keep growing. Earnings before corporate interest rise 7% in the first year and 3% a year after that, reaching about $15.48 per share in year 10, then hold flat. The business is worth about $242.77 per share; it owes about $53.91, leaving about $188.86. What changed since our previous analysis. No new financial reports have been filed since our last review, and the base and bull cases are essentially unchanged. We lowered the bear case from about $42 to about $33.56 because, on re-examination of the 2020 record, a recession trough of about $6.50 per share was too mild; we now assume about $4.00 for a year. The margin-of-safety price. We are fairly confident in the earnings level: four post-pandemic years sit in a narrow band of $672-$725 million before corporate interest. What we are most likely to be wrong about is credit: about half of sales are financed by the company, the provision has risen every year since 2023, and the securitization market must stay open to fund new loans. The worst plausible outcome is a recession that closes that market while defaults rise, forcing the company to fund loans from its own cash just as the 2029-2030 maturities arrive; with negative equity and $3.70 billion of corporate debt, the shares would absorb that hit, which is the roughly $34 bear case. If credit costs settle permanently higher and RCI shrinks faster than we assume, the shares would be worth something between the bear and base cases. The company pays a dividend of roughly $2.23 per share a year (about $149 million in 2025) during the holding period. From $65, if the business tracks the base case and the shares reach about $131 within four years, the base case implies about 21% a year including dividends; from $70 the implied return would fall short of 20%. Because the downside from leverage and credit is real, the margin-of-safety price is $65. What would make this wrong. A lasting rise in credit losses, faster shrinkage at RCI, repeated resort write-downs, or an owner base that shrinks faster than upgrades can offset would push value toward the bear case. Because the shares sit behind $3.70 billion of corporate debt, every change in the value of the business moves the per-share value by more than for an unleveraged company. On the upside, if Vacation Ownership growth reaches the bottom line instead of being absorbed by credit costs and RCI's decline, the base case is too low. The June 2026 corporate debt total comes from the company's tagged quarterly data rather than the full quarterly report text.