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VACATION OWNERSHIP NOTES RECEIVABLE
 6 Months Ended
Jun. 30, 2023
Receivables [Abstract]  
VACATION OWNERSHIP NOTES RECEIVABLE
6. VACATION OWNERSHIP NOTES RECEIVABLE
The following table shows the composition of our vacation ownership notes receivable balances, net of reserves.
June 30, 2023December 31, 2022
($ in millions)OriginatedAcquiredTotalOriginatedAcquiredTotal
Securitized$1,682 $181 $1,863 $1,571 $221 $1,792 
Non-securitized
Eligible for securitization(1)
51 1 52 63 — 63 
Not eligible for securitization(1)
335 22 357 322 21 343 
Subtotal386 23 409 385 21 406 
$2,068 $204 $2,272 $1,956 $242 $2,198 
(1)Refer to Footnote 7 “Financial Instruments” for discussion of eligibility of our vacation ownership notes receivable for securitization.
We reflect interest income associated with vacation ownership notes receivable in our Income Statements in the Financing revenues caption. The following table summarizes interest income associated with vacation ownership notes receivable.
Three Months EndedSix Months Ended
($ in millions)June 30, 2023June 30, 2022June 30, 2023June 30, 2022
Interest income associated with vacation ownership notes receivable — securitized$68 $60 $135 $119 
Interest income associated with vacation ownership notes receivable — non-securitized8 9 17 19 
Total interest income associated with vacation ownership notes receivable$76 $69 $152 $138 
Credit Quality Indicators - Vacation Ownership Notes Receivable
We use the origination of vacation ownership notes receivable and the FICO scores of the customer by brand as the primary credit quality indicators, as historical performance indicates that there is a relationship between the default behavior of borrowers by FICO and the brand associated with the vacation ownership interest (“VOI”) they have acquired. We use the term “Combined Marriott” to refer to our Marriott-, Sheraton-, and Westin-brands.
The weighted average FICO score within our consolidated vacation ownership notes receivable pool was 722 and 721, at June 30, 2023 and December 31, 2022, respectively, based on the FICO score of the borrower at the time of origination.
Acquired Vacation Ownership Notes Receivable
Acquired vacation ownership notes receivable represent vacation ownership notes receivable acquired as part of the ILG Acquisition and the Welk Acquisition. The following table shows future contractual principal payments, net of reserves, and interest rates for our acquired vacation ownership notes receivable at June 30, 2023.
Acquired Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
2023, remaining$3 $17 $20 
20243 34 37 
20253 32 35 
20263 28 31 
20273 23 26 
Thereafter8 47 55 
Balance at June 30, 2023$23 $181 $204 
Weighted average stated interest rate14.0%14.2%14.2%
Range of stated interest rates
0.0% to 21.9%
0.0% to 21.9%
0.0% to 21.9%
The following table summarizes activity related to our acquired vacation ownership notes receivable reserve.
Acquired Vacation Ownership Notes Receivable Reserve
($ in millions)Non-SecuritizedSecuritizedTotal
Balance at December 31, 2022$11 $18 $29 
Securitizations(2)2 — 
Clean-up call2 (2)— 
Write-offs(14)— (14)
Recoveries8 — 8 
Defaulted vacation ownership notes receivable repurchase activity(1)
10 (10)— 
(Decrease) increase in vacation ownership notes receivable reserve(7)4 (3)
Balance at June 30, 2023$8 $12 $20 
(1)Reflects the change attributable to the transfer of the reserve from the securitized vacation ownership notes receivable reserve to the non-securitized vacation ownership notes receivable reserve when we voluntarily repurchased securitized vacation ownership notes receivable.
The following tables show the acquired vacation ownership notes receivable, before reserves, by brand and FICO score.
Acquired Vacation Ownership Notes Receivable as of June 30, 2023
($ in millions)700+600 - 699< 600No ScoreTotal
Combined Marriott$56 $38 $5 $13 $112 
Hyatt and Welk65 45 1 1 112 
$121 $83 $6 $14 $224 
Acquired Vacation Ownership Notes Receivable as of December 31, 2022
($ in millions)700+600 - 699< 600No ScoreTotal
Combined Marriott$67 $47 $6 $16 $136 
Hyatt and Welk80 53 1 1 135 
$147 $100 $7 $17 $271 
The following tables detail the origination year of our acquired vacation ownership notes receivable, before reserves, by brand and FICO score as of June 30, 2023, and gross write-offs by brand for the first half of 2023.
Acquired Vacation Ownership Notes Receivable - Combined Marriott
($ in millions)202120202019 & PriorTotal
700 +$— $— $56 $56 
600 - 699— — 38 38 
< 600— — 5 5 
No Score— — 13 13 
$— $— $112 $112 
Gross write-offs$— $— $8 $8 
Acquired Vacation Ownership Notes Receivable - Hyatt and Welk
($ in millions)202120202019 & PriorTotal
700 +$5 $13 $47 $65 
600 - 6993 7 35 45 
< 600— 1 — 1 
No Score— — 1 1 
$8 $21 $83 $112 
Gross write-offs$— $2 $4 $6 
Originated Vacation Ownership Notes Receivable
Originated vacation ownership notes receivable represent vacation ownership notes receivable originated by Legacy-ILG and Legacy-Welk subsequent to each respective acquisition date and all Legacy-MVW vacation ownership notes receivable. The following table shows future principal payments, net of reserves, and interest rates for our originated vacation ownership notes receivable at June 30, 2023.
Originated Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
2023, remaining$22 $68 $90 
202443 140 183 
202535 146 181 
202634 154 188 
202736 161 197 
Thereafter216 1,013 1,229 
Balance at June 30, 2023$386 $1,682 $2,068 
Weighted average stated interest rate12.1%13.2%13.0%
Range of stated interest rates
0.0% to 20.9%
0.0% to 19.9%
0.0% to 20.9%
For originated vacation ownership notes receivable, we record the difference between the vacation ownership note receivable and the variable consideration included in the transaction price for the sale of the related vacation ownership product as a reserve on our vacation ownership notes receivable. The following table summarizes the activity related to our originated vacation ownership notes receivable reserve.
Originated Vacation Ownership Notes Receivable Reserve
($ in millions)Non-SecuritizedSecuritizedTotal
Balance at December 31, 2022$149 $213 $362 
Increase in vacation ownership notes receivable reserve70 11 81 
Securitizations(99)99 — 
Clean-up call43 (43)— 
Write-offs(61)— (61)
Defaulted vacation ownership notes receivable repurchase activity(1)
48 (48)— 
Balance at June 30, 2023$150 $232 $382 
(1)Reflects the change attributable to the transfer of the reserve from the securitized vacation ownership notes receivable reserve to the non-securitized vacation ownership notes receivable reserve when we voluntarily repurchased securitized vacation ownership notes receivable.
The following tables show originated vacation ownership notes receivable, before reserves, by brand and FICO score.
Originated Vacation Ownership Notes Receivable as of June 30, 2023
($ in millions)700 +600 - 699< 600No ScoreTotal
Combined Marriott$1,280 $572 $54 $302 $2,208 
Hyatt and Welk169 68 2 3 242 
$1,449 $640 $56 $305 $2,450 
Originated Vacation Ownership Notes Receivable as of December 31, 2022
($ in millions)700 +600 - 699< 600No ScoreTotal
Combined Marriott$1,210 $549 $55 $278 2,092 
Hyatt and Welk157 64 3 2 226 
$1,367 $613 $58 $280 $2,318 
The following tables detail the origination year of our originated vacation ownership notes receivable, before reserves, by brand and FICO score as of June 30, 2023, and gross write-offs by brand for the first half of 2023.
Originated Vacation Ownership Notes Receivable - Combined Marriott
($ in millions)20232022202120202019 & PriorTotal
700 +$243 $434 $250 $84 $269 $1,280 
600 - 69984 181 123 46 138 572 
< 6006 17 13 5 13 54 
No Score85 88 32 21 76 302 
$418 $720 $418 $156 $496 $2,208 
Gross write-offs$1 $9 $17 $7 $20 $54 
Originated Vacation Ownership Notes Receivable - Hyatt and Welk
($ in millions)20232022202120202019 & PriorTotal
700 +$49 $80 $35 $2 $3 $169 
600 - 69916 34 15 1 2 68 
< 600— 1 1 — — 2 
No Score2 1 — — — 3 
$67 $116 $51 $3 $5 $242 
Gross write-offs$— $3 $4 $— $— $7 
Vacation Ownership Notes Receivable on Non-Accrual Status
For both non-securitized and securitized vacation ownership notes receivable, we estimated the average remaining default rates of 11.30% as of June 30, 2023 and 11.62% as of December 31, 2022. A 0.5 percentage point increase in the estimated default rate would have resulted in an increase in the related vacation ownership notes receivable reserve of $13 million as of June 30, 2023 and $12 million as of December 31, 2022.
The following table shows our recorded investment in non-accrual vacation ownership notes receivable, which are vacation ownership notes receivable that are 90 days or more past due.
Vacation Ownership Notes Receivable
($ in millions)Non-SecuritizedSecuritizedTotal
Investment in vacation ownership notes receivable on non-accrual status at June 30, 2023
$134 $22 $156 
Investment in vacation ownership notes receivable on non-accrual status at December 31, 2022
$126 $24 $150 
The following table shows the aging of the recorded investment in principal, before reserves, in vacation ownership notes receivable as of June 30, 2023 and December 31, 2022.
As of June 30, 2023As of December 31, 2022
($ in millions)Non-SecuritizedSecuritizedTotalNon-SecuritizedSecuritizedTotal
31 – 90 days past due$18 $51 $69 $25 $56 $81 
91 – 120 days past due6 13 19 7 16 23 
Greater than 120 days past due128 9 137 119 8 127 
Total past due152 73 225 151 80 231 
Current415 2,034 2,449 415 1,943 2,358 
Total vacation ownership notes receivable$567 $2,107 $2,674 $566 $2,023 $2,589