Vacation Ownership Contract Receivables

12 Months Ended

Dec. 31, 2017

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:

	2017		2016
Current vacation ownership contract receivables:
Securitized	$	227	$	235
Non-securitized	88		84
	315		319
Less: Allowance for loan losses	63		57
Current vacation ownership contract receivables, net	$	252	$	262
Long-term vacation ownership contract receivables:
Securitized	$	2,326	$	2,254
Non-securitized	951		825
	3,277		3,079
Less: Allowance for loan losses	628		564
Long-term vacation ownership contract receivables, net	$	2,649	$	2,515

Principal payments that are contractually due on the Company’s vacation ownership contract receivables during the next 12 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, 2017 and thereafter are as follows:

	Securitized		Non - Securitized		Total
2018	$	227	$	88	$	315
2019	242		92		334
2020	261		98		359
2021	282		104		386
2022	299		110		409
Thereafter	1,242		547		1,789
	$	2,553	$	1,039	$	3,592

During 2017, 2016 and 2015, the Company’s securitized vacation ownership contract receivables generated interest income of $340 million, $332 million and $333 million, respectively.

During 2017, 2016 and 2015, the Company originated vacation ownership contract receivables of $1,392 million, $1,225 million and $1,091 million, respectively, and received principal collections of $866 million, $820 million and $796 million, respectively. The weighted average interest rate on outstanding vacation ownership contract receivables was 13.9% as of both December 31, 2017 and 2016, respectively and 13.8% as of December 31, 2015.

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, 2014	$	581
Provision for loan losses	248
Contract receivables written off, net	(248		)
Allowance for loan losses as of December 31, 2015	581
Provision for loan losses	342
Contract receivables write-offs, net	(302		)
Allowance for loan losses as of December 31, 2016	621
Provision for loan losses	420
Contract receivables write-offs, net	(350		)
Allowance for loan losses as of December 31, 2017	$	691

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 to 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, 2017
	700+		600-699		<600		No Score		Asia Pacific		Total
Current	$	1,849	$	1,021	$	166	$	133	$	262	$	3,431
31 - 60 days	19		32		17		5		2		75
61 - 90 days	9		18		13		3		1		44
91 - 120 days	9		16		15		2		—		42
Total	$	1,886	$	1,087	$	211	$	143	$	265	$	3,592
	As of December 31, 2016
	700+		600-699		<600		No Score		Asia Pacific		Total
Current	$	1,733	$	1,010	$	149	$	120	$	232	$	3,244
31 - 60 days	19		32		17		4		2		74
61 - 90 days	11		16		11		3		1		42
91 - 120 days	8		14		13		2		1		38
Total	$	1,771	$	1,072	$	190	$	129	$	236	$	3,398

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.