Vacation Ownership Contract Receivables

12 Months Ended

Dec. 31, 2012

Vacation Ownership Contract Receivables [Abstract]

Vacation Ownership Contract Receivables

Vacation Ownership Contract Receivables

The Company generates vacation ownership contract receivables by extending financing to the purchasers of its VOIs. As of December 31, current and long-term vacation ownership contract receivables, net consisted of:

	2012			2011
Current vacation ownership contract receivables:
Securitized	$	252		$	262
Non-securitized	118		(*)	76
	370			338
Less: Allowance for loan losses	52			41
Current vacation ownership contract receivables, net	$	318		$	297
Long-term vacation ownership contract receivables:
Securitized	$	2,149		$	2,223
Non-securitized	867		(*)	681
	3,016			2,904
Less: Allowance for loan losses	445			353
Long-term vacation ownership contract receivables, net	$	2,571		$	2,551

^(*)Includes $26 million and $103 million of current and long-term vacation ownership contract receivables, respectively, related to Shell.

As of December 31, 2012, vacation ownership contract receivables acquired in connection with Shell had an outstanding balance of $172 million with a related carrying balance of $123 million.

Principal payments that are contractually due on the Company’s vacation ownership contract receivables during the next twelve months are classified as current on the Consolidated Balance Sheets. Principal payments due on the Company’s vacation ownership contract receivables during each of the five years subsequent to December 31, 2012 and thereafter are as follows:

	Securitized		Non - Securitized		Total
2013	$	252	$	118	$	370
2014	273		127		400
2015	291		120		411
2016	304		112		416
2017	290		108		398
Thereafter	991		400		1,391
	$	2,401	$	985	$	3,386

During 2012, 2011 and 2010, the Company’s securitized vacation ownership contract receivables generated interest income of $306 million, $322 million and $336 million, respectively.

During 2012, 2011 and 2010 the Company originated vacation ownership contract receivables of $1,074 million, $969 million and $983 million, respectively, and received principal collections of $771 million, $762 million and $781 million, respectively. The weighted average interest rate on outstanding vacation ownership contract receivables was 13.4%, 13.3% and 13.1% at 2012, 2011 and 2010, respectively.

The activity in the allowance for loan losses on vacation ownership contract receivables was as follows:

	Amount
Allowance for loan losses as of December 31, 2009	$	370
Provision for loan losses	340
Contract receivables written off, net	(348		)
Allowance for loan losses as of December 31, 2010	362
Provision for loan losses	339
Contract receivables written-off, net	(307		)
Allowance for loan losses as of December 31, 2011	394
Provision for loan losses	409
Contract receivables written off, net	(306		)
Allowance for loan losses as of December 31, 2012	$	497

Credit Quality for Financed Receivables and the Allowance for Credit Losses

The basis of the differentiation within the identified class of financed VOI contract receivable is the consumer’s FICO score. A FICO score 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. The Company updates its records for all active VOI contract receivables with a balance due on a rolling monthly basis so as to ensure that all VOI contract receivables are scored at least every six months. The Company groups all VOI contract receivables into five different categories: FICO scores ranging from 700 to 850, 600 to 699, Below 600, No Score (primarily comprised of consumers for whom a score is not readily available, including consumers declining access to FICO scores and non U.S. residents) and Asia Pacific (comprised of receivables in the Company’s Wyndham Vacation Resort Asia Pacific business for which scores are not readily available).

The following table details an aged analysis of financing receivables using the most recently updated FICO scores (based on the policy described above):

	As of December 31, 2012
	700+		600-699		<600		No Score		Asia Pacific		Total
Current	$	1,459	$	1,064	$	274	$	94	$	312	$	3,203
31 - 60 days	13		26		23		3		5		70
61 - 90 days	10		14		17		2		2		45
91 - 120 days	13		30		23		1		1		68
Total	$	1,495	$	1,134	$	337	$	100	$	320	$	3,386
	As of December 31, 2011
	700+		600-699		<600		No Score		Asia Pacific		Total
Current	$	1,424	$	985	$	320	$	77	$	290	$	3,096
31 - 60 days	15		23		24		3		3		68
61 - 90 days	8		14		15		1		2		40
91 - 120 days	8		11		17		1		1		38
Total	$	1,455	$	1,033	$	376	$	82	$	296	$	3,242

The Company ceases to accrue interest on VOI contract receivables once the contract has remained delinquent for greater than 90 days. At greater than 120 days, the VOI contract receivable is written off to the allowance for loan losses. In accordance with its policy, the Company assesses the allowance for loan losses using a static pool methodology and thus does not assess individual loans for impairment separate from the pool. The Company did not have a material number of modified VOI contract receivables as of December 31, 2012 and 2011.