Hilton Grand (HGV) Q2 Revenue Misses 8%

Hilton Grand Vacations (HGV -0.74%), a leading timeshare and vacation ownership company behind the Hilton brand, reported Q2 2025 results on July 31, 2025. The release highlighted strong contract sales and ongoing integration of acquired businesses, particularly Bluegreen Vacations. However, both GAAP revenue and non-GAAP adjusted earnings per share missed Wall Street forecasts. GAAP revenue reached $1.266 billion versus estimates of $1.378 billion, and adjusted EPS (non-GAAP) was $0.54 compared to an expected $0.81. The period saw solid top-line growth in contract sales and notable operational gains, but also margin pressure, a significant drop in adjusted free cash flow (non-GAAP), and weak membership growth, with consolidated Net Owner Growth (NOG) of 0.6% for the twelve months ended Q2 2025.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Strategic Focus

Hilton Grand Vacations focuses on selling vacation ownership interests (VOIs), commonly known as timeshares, across the United States and internationally. Its business includes real estate sales, resort operations, club management, rental and ancillary services, and a lending arm that provides financing for timeshare buyers. The company leverages the well-known Hilton brand and a network of partnerships, including those with Bass Pro Shops and Choice Hotels, to attract and serve customers.

Recently, the company’s strategy has emphasized expansion through acquisitions and brand partnerships. The purchase of Bluegreen Vacations in January 2024 broadened the product range and increased the customer base. Success depends on effective integration of these acquisitions, leveraging brand recognition, strong inventory management, and maintaining robust financing solutions for customers. Key performance measures include contract sales, membership growth, and profitability margins across its business segments.

Key Developments and Metrics for the Quarter

Contract sales rose 10.2% to $834 million in Q2 2025. Despite higher headline sales, overall GAAP revenue and adjusted EPS (non-GAAP) both came in below analyst estimates.

The real estate sales and financing segment posted $760 million in revenue, but profit margins experienced pressure in part from a $45 million net deferral tied to ongoing projects in Hawaii and Japan. Financing revenue benefited from higher interest rates and a larger loan portfolio, with segment financing revenue up $24 million compared to Q2 2024 and profit margin (non-GAAP) remained relatively stable. The timeshare financing loan book totaled approximately $4.02 billion as of December 31, 2024, maintaining a 15.0% weighted average interest rate as of December 31, 2024 with a 10.2% annualized default rate for Q1 2025.

In resort operations and club management, revenue grew by $19 million to $405 million, yet adjusted EBITDA slipped from $152 million to $149 million, and Adjusted EBITDA profit margin dropped to 36.8%. Club membership was approximately 724,300 as of Q2 2025, with net owner growth at just 0.6% over the trailing twelve months ended June 30, 2025, compared to 1.7% in the prior twelve months.

The rental and ancillary services segment, which covers services beyond core timeshare sales, reported $195 million in GAAP revenue (flat year over year). This segment moved to a loss of $8 million from a $7 million profit compared to Q2 2024, with the profit margin falling to negative 4.1% (non-GAAP).

Long-Term Positioning, Acquisition, and Financial Actions

Rebranding projects and the expansion of the HGV Max member platform continued, leveraging acquired customer bases and locations. These actions are designed to boost operating efficiencies and drive customer engagement across the expanded resort portfolio.

Inventory management continues to be crucial, with the company’s pipeline valued at $13.3 billion based on current prices as of Q2 2025. Owned inventory represented 90.6% of the company’s total contract sales pipeline as of Q2 2025, and fee-for-service inventory -- where the company manages but does not own vacation units -- has dropped as a share of the mix. This strategy places more risk on the balance sheet if sales slow, so maintaining sales momentum is key.

On the financial services front, the company’s lending operations contributed significantly to revenue and profit, with most loans carrying interest rates around 15.0% as of December 31, 2024. Securitization of its loan book remains a core liquidity strategy, allowing HGV to convert loan assets into cash that it can use for both operational needs and shareholder returns.

Shareholder returns were highlighted by share repurchases: 4.1 million shares were repurchased for $150 million in Q2 2025. The board approved an additional $600 million repurchase authorization over a two-year period on July 29, 2025. Cash flow, however, faced pressure. Adjusted free cash flow dropped 63.5% year over year in Q2 2025. Free cash flow was $28 million, compared to $95 million for the same period in the prior year, a 70.5% decline. The company's net leverage ratio remained at approximately 3.9x trailing-twelve-month EBITDA as of June 30, 2025. Hilton Grand Vacations does not currently pay a dividend.

Outlook and What to Watch Ahead

Management reiterated its prior 2025 guidance for full-year adjusted EBITDA (before deferrals and recognitions), holding the range at $1.125 billion to $1.165 billion. No additional or updated guidance was provided for revenue or earnings per share for the remainder of the year.

For investors and observers, membership growth, the pace of Bluegreen integration, and recovery in profit margins are watch points for the next periods. Potential risks include further pressure on cash flow, slower net owner growth, and the impacts of greater reliance on owned (rather than fee-for-service) inventory. The company also flagged ongoing macroeconomic risks that could affect consumer demand, but refrained from offering new quantitative outlooks beyond the EBITDA guidance.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.