Hospitality company Travel + Leisure (NYSE: TNL) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 2% year on year to $934 million. Its non-GAAP profit of $1.11 per share was in line with analysts’ consensus estimates.
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Travel + Leisure (TNL) Q1 CY2025 Highlights:
- Revenue: $934 million vs analyst estimates of $930 million (2% year-on-year growth, in line)
- Adjusted EPS: $1.11 vs analyst estimates of $1.12 (in line)
- Adjusted EBITDA: $202 million vs analyst estimates of $199.6 million (21.6% margin, 1.2% beat)
- EBITDA guidance for the full year is $970 million at the midpoint, in line with analyst expectations
- Operating Margin: 16.7%, in line with the same quarter last year
- Free Cash Flow Margin: 10.7%, up from 3.3% in the same quarter last year
- Tours Conducted: 153,000, down 2,000 year on year
- Market Capitalization: $3.17 billion
StockStory’s Take
Travel + Leisure’s first quarter results reflected resilient consumer demand for its vacation ownership business despite a more uncertain macroeconomic environment. CEO Michael Brown highlighted stable volume per guest (VPG) and elevated owner engagement as key factors underpinning performance, while also emphasizing increased satisfaction rates and the growing adoption of the Club Wyndham app. Management acknowledged that tour flow was slightly down versus last year’s strong comparisons, but reaffirmed that forward bookings and owner usage trends remain in line with expectations, helping to offset softness in new owner close rates.
Looking ahead, leadership reiterated full-year adjusted EBITDA guidance, citing confidence in owner retention and the flexibility of the business model to adjust to shifting demand. CFO Mike Hug noted that higher loan delinquencies led to an increased provision rate, but added that improved collections in April offer some reassurance. Management also pointed to continued investments in technology and brand partnerships as potential drivers for future growth, while remaining vigilant about potential headwinds in the travel and membership segment.
Key Insights from Management’s Remarks
Travel + Leisure’s management pointed to a mix of stable owner demand, incremental technology adoption, and industry headwinds as drivers of the quarter’s results and evolving outlook.
- Vacation Ownership Resilience: Vacation ownership (VO) remained the primary earnings driver, with volume per guest (VPG) exceeding $3,000 and owner close rates slightly up year-over-year. Management attributed this resilience to the non-discretionary nature of vacations for its core customer base, which is characterized by high tenure and a majority of fully paid owners.
- Tour Flow Dynamics: While new owner tour mix returned to historical norms, total tours were down due to tough comparisons with last year’s marketing surge. Management expects new owner mix to increase through the summer, aligning with typical seasonal patterns.
- Technology Investments: Uptake of the Club Wyndham app accelerated, improving booking conversion rates and owner satisfaction. The company plans to roll out similar digital tools to its WorldMark owner base later this year, aiming for broader engagement and frictionless transactions.
- Travel and Membership Pressures: Industry consolidation continues to drive a migration from external to internal exchanges, leading to a decline in exchange transactions. However, the travel club business saw modest transaction growth, which management expects to accelerate in the next quarter.
- Brand Strategy Realignment: Significant resources have been dedicated to expanding brand partnerships, including progress on Sports Illustrated and Margaritaville offerings. Leadership emphasized a near-completed organizational realignment to support execution and growth across these brands.
Drivers of Future Performance
Management’s outlook for the year centers on stable owner demand, ongoing digital initiatives, and navigating headwinds in the travel and membership segment.
- Owner Demand Stability: Leadership expects the core owner base to remain engaged, with forward bookings and summer rental demand tracking in line with historical trends. Management is closely monitoring travel patterns and booking windows for early signs of any shift in consumer sentiment.
- Digital Platform Expansion: Broader deployment of mobile apps and digital communication tools is anticipated to support owner satisfaction and higher booking conversion rates, which could partially offset potential declines elsewhere.
- Exchange Transaction Headwinds: The migration from external to internal exchanges is expected to continue, pressuring transaction volumes in the travel and membership segment. Management is focusing on growing travel club adoption as a partial counterbalance, but recognizes that this will not fully offset exchange declines in the near term.
Top Analyst Questions
- David Katz (Jefferies): Asked about April trends and sustainability of demand in travel and membership; management cited ongoing strength in VO metrics and improving collections, but acknowledged continued exchange headwinds.
- Patrick Scholes (Truist Securities): Probed on summer rental demand and new owner close rates; management indicated summer bookings are solid and close rates for owners were slightly up, while new owner close rates were marginally softer.
- Dany Asad (Bank of America): Sought clarification on adjustments to guidance and the offsetting factors between segments; CFO explained VO outperformance and cost controls helped cover travel and membership shortfalls and higher provisions.
- Ben Chaiken (Mizuho Securities): Inquired about the acceleration in exchange transaction declines and timing of Sports Illustrated inventory; management pointed to ongoing industry consolidation and confirmed SI sales will begin this year following a trust conversion.
- Steven Grambling (Morgan Stanley): Questioned the company’s ability to pivot toward existing owner upgrades if new owner demand weakens; management highlighted operational flexibility and investments in owner engagement as strategic levers if needed.
Catalysts in Upcoming Quarters
As we look to future quarters, the StockStory team will track (1) the pace of adoption and impact of new digital platforms across the owner base, (2) whether travel and membership transaction declines stabilize or are offset by increased travel club growth, and (3) ongoing progress in activating new brand partnerships like Sports Illustrated and Margaritaville. Effective execution in these areas will be critical to maintaining stable earnings and supporting management’s guidance.
Travel + Leisure currently trades at a forward P/E ratio of 7.2×. At this valuation, is it a buy or sell post earnings? Find out in our free research report.
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