Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Note 4: Revenue from Contracts with Customers

Disaggregation of Revenue

The following tables show our disaggregated revenues by product and segment from contracts with customers. We operate our business in the following two segments: (i) Real estate sales and financing and (ii) Resort operations and club management. Please refer to Note 20: Business Segments below for more details related to our segments.

($ in millions)	Three Months Ended March 31,
Real Estate Sales and Financing Segment	2022		2021
Sales of VOIs, net	$	269	$	33
Sales, marketing, brand and other fees		119		53
Interest income		55		31
Other financing revenue		9		6
Real estate sales and financing segment revenues	$	452	$	123

($ in millions)	Three Months Ended March 31,
Resort Operations and Club Management Segment	2022		2021
Club management	$	51	$	27
Resort management		74		18
Rental(1)		124		30
Ancillary services		12		2
Resort operations and club management segment revenues	$	261	$	77

(1) Excludes intersegment eliminations. See Note 20: Business Segments for additional information.

Contract Balances

The following table provides information on our accounts receivable from contracts with customers which are included in Accounts receivable, net on our unaudited condensed consolidated balance sheets:

	March 31,		December 31,
($ in millions)	2022		2021
Receivables	$	271	$	202

The following table presents the composition of our contract liabilities.

	March 31,		December 31,
($ in millions)	2022		2021
Contract liabilities:
Advanced deposits	$	126	$	112
Deferred sales of VOIs of projects under construction		77		34
Club dues and Legacy-HGV Club activation fees		159		91
Bonus Point incentive liability(1)		47		44

(1) Amounts related to the Bonus Point incentive liability are included in Accounts payable, accrued expenses and other on our unaudited condensed consolidated balance sheets. This liability is comprised of unrecognized revenue for incentives from VOI sales and sales and marketing expenses in conjunction with our fee-for-service arrangements.

Revenue earned for three months ended March 31, 2022 that was included in the contract liabilities balance at December 31, 2021 was approximately $44 million.

Our accounts receivables that relate to our contracts with customers includes amounts associated with our contractual right to consideration for completed performance obligations related primarily to our fee-for-service arrangements and homeowners’ associations management agreements and are settled when the related cash is received. Accounts receivable are recorded when the right to consideration becomes unconditional and is only contingent on the passage of time. Refer to Note 7: Timeshare Financing Receivables for information on balances and changes in balances during the period related to our timeshare financing receivables.

Contract assets relate to incentive fees that can be earned for meeting certain targets on sales of VOIs at properties under our fee-for-service arrangements; however, our right to consideration is conditional upon completing the requirements of the annual incentive fee period. There were no contract assets as of March 31, 2022 and December 31, 2021, respectively.

Contract liabilities include payments received or due in advance of satisfying our performance obligations. Such contract liabilities include advance deposits received on prepaid vacation packages for future stays at our resorts, deferred revenues related to sales of VOIs of projects under construction, Club activation fees and annual dues and the liability for Bonus Points awarded to our customers for purchase of VOIs at our properties or properties under our fee-for-service arrangements that may be redeemed in the future.

In addition to the contract liabilities included herein, we also have deferred revenue of $159 million and $112 million as of March 31, 2022 and December 31, 2021, respectively. This additional deferred revenue balance includes $50 million and $51 million for bonus points and marketing package deferred revenue, $30 million and $10 million in deferred property insurance, $38 million and $14 million in deferred maintenance fees and $41 million and $37 million in other deferred revenue as of March 31, 2022 and December 31, 2021, respectively.

Transaction Price Allocated to Remaining Performance Obligations

Transaction price allocated to remaining performance obligations represents contract revenue that has not yet been recognized. Our contracts with remaining performance obligations primarily include (i) sales of VOIs under construction, (ii) Legacy-HGV Club activation fees paid at closing of a VOI purchase, (iii) customers’ advanced deposits on prepaid vacation packages and (iv) Bonus Points that may be redeemed in the future.

The following table represents the deferred revenue, cost of VOI sales and direct selling costs from sales of VOIs related to projects under construction as of March 31, 2022 and December 31, 2021:

	March 31,		December 31,
($ in millions)	2022		2021
Sales of VOIs, net	$	77	$	34
Cost of VOI sales(1)		26		12
Sales and marketing expense		11		5

(1) Includes anticipated Cost of VOI sales related to inventory associated with Sales of VOIs under construction that will be acquired under a just-in-time arrangement once construction is complete.

We expect to recognize the revenue, costs of VOI sales and direct selling costs related to the projects under construction as of March 31, 2022 upon their completion in 2022.

The following table includes the remaining transaction price related to Advanced deposits, and Legacy-HGV Club activation fees and Bonus Points as of March 31, 2022:

($ in millions)	Remaining Transaction Price		Recognition Period	Recognition Method
Advanced deposits	$	126	18 months	Upon customer stays
Legacy-HGV Club activation fees		62	7 years	Straight-line basis over average inventory holding period
Bonus Points		47	18 - 30 months	Upon redemption