Background and Basis Of Presentation

12 Months Ended

Dec. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure

Background and Basis of Presentation

Background

On January 5, 2021, Wyndham Destinations, Inc. acquired the Travel + Leisure brand and all related assets from Meredith Corporation (“Meredith”). In connection with this acquisition, Wyndham Destinations, Inc. changed its name to Travel + Leisure Co. and changed its ticker symbol to TNL on February 17, 2021.

The newly named Travel + Leisure Co. and its subsidiaries (collectively, “Travel + Leisure,” or the “Company,” formerly Wyndham Destinations, Inc.) is a global provider of hospitality services and travel products. The Company operates in two segments: Vacation Ownership (formerly Wyndham Vacation Clubs) and Travel and Membership (formerly Vacation Exchange or Panorama). In connection with the Travel + Leisure brand acquisition the Company elected to update its segment names to better align with how the segments will be referred to internally and externally.

The Vacation Ownership segment develops, markets, and sells vacation ownership interests (“VOIs”) to individual consumers, provides consumer financing in connection with the sale of VOIs, and provides property management services at resorts. The Travel and Membership segment operates a variety of travel businesses, including three vacation exchange brands, a home exchange network, travel technology platforms, travel memberships, and direct-to-consumer rentals.

The results of operations for 2020 include impacts related to the novel coronavirus global pandemic (“COVID-19”), which have been significantly negative for the travel industry, the Company, its customers, and employees. The Company’s response to COVID-19 initially focused on the health and safety of its owners, members, guests, and employees, when it closed the majority of its resorts and sales centers. As a result, the Company significantly reduced its workforce and furloughed thousands of employees. As of December 31, 2020, the Company has reopened 81% of its resorts (92% as of the date of this filing) and reopened 86% of its sales offices (92% as of the date of this filing). Throughout 2020, many of the Company’s employees returned to work as locations reopened; however, the Company exited the year with approximately 5,300 employees either laid off or furloughed. The Company’s reopening plans were negatively impacted in the fourth quarter of 2020 by government shutdowns in California and Hawaii, which required temporarily closing resorts previously reopened. The Company estimates that the remaining suspended operations will resume in early 2021.

Given these significant events, the Company’s revenues were negatively impacted and $385 million of charges related to COVID-19 were incurred during the year ended December 31, 2020, which are discussed in further detail in Note 26—COVID-19 Related Items.

The Company was also keenly focused on preserving cash, cutting costs, and managing liquidity. As a precautionary measure to enhance liquidity, the Company drew down its $1.0 billion revolving credit facility at the end of the first quarter of 2020, and subsequently issued new $650 million senior secured notes, with a portion of these proceeds used to pay down borrowings under its revolving credit facility. The Company also amended the credit agreement for its revolving credit facility and term loan B, which provided flexibility during the relief period spanning from July 15, 2020 through April 1, 2022. See Note 16—Debt for additional details. Additionally, the Company suspended share repurchase activity since March 2020.

On April 29, 2020, the Company successfully closed on a $325 million private securitization financing. While this transaction was at a higher cost compared to transactions the Company has completed in the past, it was favorable to similar transactions completed in the public market at that time. The Company also closed on a $575 million securitization financing on August 13, 2020, at a similar cost compared to transactions it has completed in the past. These transactions positively impacted the Company’s liquidity and reinforced its expectation to maintain adequate liquidity for the near future.

On August 7, 2019, the Company acquired Alliance Reservations Network (“ARN”) for $102 million ($97 million net of cash acquired). ARN provides private-label travel booking technology solutions. This acquisition was undertaken for the purpose of accelerating growth at Travel and Membership by increasing the offerings available to its members and affiliates. The Company has recognized the assets and liabilities of ARN based on estimates of their acquisition date fair values, including the impacts of certain post-closing adjustments. ARN is reported within the Travel and Membership segment. See Note 5—Acquisitions for additional details.

During 2018, the Company completed the sale of its European vacation rentals business and completed the spin-off of its hotel business (“Spin-off”) into a separate publicly traded company, Wyndham Hotels & Resorts, Inc. (“Wyndham Hotels”). This transaction was effected through a pro rata distribution of the new hotel entity’s stock to Travel + Leisure shareholders. In connection with the Spin-off, the Company entered into certain agreements with Wyndham Hotels to implement the legal and structural separation, govern the relationship between the Company and Wyndham Hotels up to and after the completion of the separation, and allocate various assets, liabilities, and obligations, including, among other things, employee benefits, intellectual property, and tax-related assets and liabilities between the Company and Wyndham Hotels. The two public companies have entered into long-term exclusive license agreements to retain their affiliations with one of the industry’s top-rated loyalty programs, Wyndham Rewards, as well as to continue to collaborate on inventory-sharing and customer cross-sell initiatives.

For all relevant periods presented, the Company has classified the results of operations for its hotel business and its European vacation rentals business as discontinued operations. See Note 6—Discontinued Operations for further details.

Also during 2018, the Company decided to explore strategic alternatives for its North American vacation rentals business and on October 22, 2019, completed the sale of this business for $162 million. The assets and liabilities of this business were classified as held-for-sale as of December 31, 2018. This business did not meet the criteria to be classified as a discontinued operation; therefore, the results of operations are reflected within continuing operations on the Consolidated Statements of (Loss)/Income through the date of sale. See Note 7—Held-for-Sale Business for further details.

Basis of Presentation

The accompanying Consolidated Financial Statements in this Annual Report on Form 10-K include the accounts and transactions of Travel + Leisure, as well as the entities in which Travel + Leisure directly or indirectly has a controlling financial interest. The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. All intercompany balances and transactions have been eliminated in the Consolidated Financial Statements. In addition, certain prior period amounts have been reclassified to comply with newly adopted accounting standards.

The Company presents an unclassified balance sheet which conforms to that of the Company’s peers and industry practice.

In presenting the Consolidated Financial Statements, management makes estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates and assumptions. In management’s opinion, the Consolidated Financial Statements contain all normal recurring adjustments necessary for a fair presentation of annual results reported.