Prepared remarks
Good morning and welcome to the Hilton Grand Vacations First Quarter 2025 Earnings Conference Call. A telephone replay will be available for seven days following the call. The dial-in number is 844-512-2921 and enter pin 13751066. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. I would now like to turn the call over to Mark Melnyk, Senior Vice President of Investor Relations. Please go ahead sir.
Thank you, operator, and welcome to the Hilton Grand Vacations first quarter 2025 earnings call. As a reminder, our discussion this morning will include forward-looking statements. Actual results could differ materially from those indicated by these forward-looking statements and statements are effective only as of today. We undertake no obligation to publicly update or revise these statements. For a discussion of some of the factors that could cause actual results to differ, please see the risk factors section of our SEC filings. Also, be referring to certain non-GAAP financial measures. You can find definitions and components of such non-GAAP numbers as well as reconciliations of non-GAAP and GAAP financial measures discussed today in our earnings press release and on our website at investors.hgv.com. Our reported results for all periods reflect the accounting rules under ASC 606, which we adopted in 2018.
Under ASC 606, we're required to defer certain revenues and expenses related to sales made in the period when a project is under construction and then hold off on recognizing those revenues and expenses until the period when construction is completed. For ease of comparability and a simplified discussion today, our comments on adjusted EBITDA and our real estate results were reported results excluding the net impact of construction-related deferrals and recognitions for all reporting periods. To help you make more meaningful period-to-period comparisons, you can find details of our current and historical deferrals and recognitions in Table T1 of our earnings release and a complete accounting of our historical deferral and recognition activity can also be found in Excel format on the Financial Reporting section of our Investor Relations' website. With that, let me turn the call over to our CEO, Mark Wang. Mark?
Good morning everyone and welcome to our first quarter earnings call. I'm happy to report another solid quarter of results today driven by the team's hard work in addition to the structural process improvements we carried out over the past several quarters. Those efforts have yielded positive results producing an acceleration in transactions, VPG growth, and sales growth in the quarter. I'm also pleased that we carried that momentum through April. On-the-book arrival trends and cancellation rates are generally consistent with the past several quarters and vacation package sales have remained strong. But while we've generated positive performance, thanks in large part to our initiatives, we also recognize that the macroeconomic environment has recently become more volatile and unpredictable. And although we have limited exposure to many of the recent policy announcements, such as tariffs, they have the potential to create additional consumer uncertainty to which we're not immune.
So, while it's still too early to know the impact of these policies and when that impact may be felt, we're taking deliberate actions in areas that we can control in order to insulate our business from this macroeconomic volatility. To that end, along with maintaining our disciplined approach to process and execution, we've redoubled our efforts on implementing additional programs that are visible, impactful, and readily achievable this year. While these actions are designed to produce results in the near-term, they'll also serve as ongoing drivers that will benefit our business over the long-term. In addition, our business model has several fundamental advantages that provide a buffer against macro volatility. Our direct marketing approach means that we create our own demand. We have the most diversified business in the industry with a variety of brands, price points, product types, and vacation destinations in both fly-to and drive-to markets.
We have a dedicated member base who have prepaid their vacations, having paid their annual dues for the year, making them more likely to travel. In addition, we have a natural hedge from our highly variable cost structure and we've demonstrated the ability to make further adjustments to our cost structure if the environment demands it. More than half of our EBITDA is contractually recurring in nature and we convert 55% to 65% of our EBITDA into free cash flow providing additional financial flexibility. These traits reinforce the strongest value proposition we've ever had with the benefit of HGV Max and the quality and scale of our portfolio backed by the power of the Hilton brand. So I'm pleased with our results for the quarter and with the momentum that we've carried into Q2, we're maintaining our EBITDA guidance for the year which Dan will take you through shortly. While it's certainly harder today to predict the future than it has been in the past, our focus is on being proactive with the initiatives we've identified and continuing to control what we can control to navigate to any potential uncertainty.
Looking at our results for the quarter. Reported contract sales were up 10% to $721 million and adjusted EBITDA was $248 million with margins excluding reimbursements of 22%. As we've seen in prior quarters tour growth was impacted due to our efficiency programs as we continue to utilize our scoring models to maximize the quality of the tours we bring in. Notably our efficiency efforts are helping to drive improved close rates transactions and VPG. VPG grew 15% to more than $4,100 with growth in both our owners and new buyer channels. Owner VPGs were particularly strong in the quarter as they also benefited from the continued success of Ka Haku sales and the launch of HGV Max to Bluegreen members. Looking at our demand indicators, occupancy in the quarter which includes Bluegreen in both periods was flat at 77%. Consolidated arrivals in the second quarter remain ahead of prior year and they are in line with the prior year when looking at the next six months.
And our rental channels continue to indicate solid booking growth over the next several quarters reflecting continued demand from independent leisure travelers. Our industry-leading marketing package pipeline remains robust at over 725,000 packages and our packaged sales trends have remained healthy. In addition, the portion of our pipeline with confirmed travel dates was up nicely from the fourth quarter to its highest level in a year. So as I mentioned earlier, while we're cognizant of the broader environment and news flow we haven't yet seen any material shifts in our four demand indicators. Turning to our other business units, our member count was 725,000 at the end of the quarter with a net owner growth of just under 1%. HGV Max growth continues to outperform as members appreciate the benefits that Max membership brings. And our research shows that our Max members have our highest satisfaction scores across every ownership tenure.
We're now over 215,000 Max members with Bluegreen contributing nearly 13,000 members to that total and only a handful of months since the launch. Our rental businesses continued to show consistent top-line growth. And while trends have remained consistent we're monitoring them closely for any signs of deterioration. In our financing business, optimization continues to benefit our cash flow enabling us to repurchase $150 million worth of stock during the quarter. Turning next to our update on our initiatives and integration progress. Over the last few quarters, we've spoken about several key efforts mainly optimizing our staffing levels in our sales centers and evolving our scoring models to help identify and prioritize tours with a higher likelihood of closing. When combined with our introduction of HGV Max into the Bluegreen system and the launch of Ka Haku, these programs have helped produce positive results since implementation, supporting strong transaction, VPG growth, and contract sales.
Building upon that success, we're implementing additional initiatives that we bucketed into three main categories. The first is enhanced lead generation. This includes directing more resources toward packaged sales and activations along with introducing new marketing campaigns particularly for owners and guests that have previously toured with us before. And we're also accelerating our digital marketing integration efforts with our partners. The second bucket is execution related. This includes further refinement of our scoring models along with new pre-tour qualifying to ensure that we're touring our highest propensity guests. In addition, we'll be offering more flexible financing options to allow members to enter and stay within the HGV system. And the last bucket is product enhancements, which includes the previously mentioned enhancements to our mass products slated for later this year.
And we're adding additional features aimed at driving incremental engagement and encouraging additional member stays at our property. Collectively we believe these initiatives can support our EBITDA and cash flow goals regardless of the macro environment. And over the long-term, they'll continue to generate a positive impact by improving the efficiency of the business, strengthening our value proposition, and improving member engagement. Turning to the Bluegreen integration, we've reached $89 million of cost synergies and are confident in achieving our target of $100 million this year. And we're just ahead of launching Bluegreen Property rebrand program with the expectation that we'll complete 10 to 12 rebrands in each of the next three years. On the partnership front, we added nine new Great Wolf locations and rebranded 79 Bass Pro locations and we opened a number of sales centers dedicated to servicing our Choice customers.
So to sum up, we've had another strong quarter and that momentum has continued into Q2. The combination of our new offerings and our efficiency initiatives enabled us to drive an acceleration in transactions, VPG growth, and contract sales. While market volatility and uncertainty have increased in recent weeks we continue to take a proactive approach with additional initiatives to ensure we sustain our momentum. We're focused on controlling the things that we can control but will continue to adapt as needed to protect and grow the long-term value of the business. So with that, I'd like to extend a warm welcome back to Dan who will take you through the numbers. Dan?
Thank you, Mark and good morning, everyone. Before we start, note that our reported results for this quarter included $126 million of sales deferrals which reduced reported GAAP revenue and were related to presales of our newest project Ka Haku. We also recorded $58 million of associated direct expense deferrals. Adjusting for these two items would increase the adjusted EBITDA reported in our press release by a net $68 million to $248 million. In my prepared remarks, I'll only refer to metrics excluding net deferrals, which more accurately reflects the cash flow dynamics of our financial performance during the period. As Mark discussed, Q1 was characterized by strong operating performance, driven by a focus on tour efficiency combined with the continuation of HGV Max being offered to the Bluegreen member base and the continued success of Ka Haku. These items helped drive a 15% increase in pro forma VPGs resulting in contract sales growing 10% year-over-year on a pro forma basis.
In addition to strong operating performance made significant strides in advancing the optimization of our financing business with approximately 70% of our current receivables securitized at the end of the quarter. This is within our target of securitizing 70% to 80% of current receivables on a steady-state basis. The higher securitized position helped drive our adjusted free cash flow conversion rate of 75% of our adjusted EBITDA for Q1 2025. We anticipate being in the ABS markets this coming summer as we seek to term out our receivables securitized through the warehouse at quarter-end. Earlier in the quarter, we also successfully recast our $1 billion revolver and repriced all of our outstanding term loans resulting in reduced pricing spreads and expanded covenants. Maturities for these facilities and our senior notes have now been extended to 2028 through 2032. Turning to our results for the quarter, total revenue excluding cost reimbursements in the quarter grew 11% to $1.1 billion and adjusted EBITDA was $248 million with margins excluding reimbursements of 22%.
The EBITDA included approximately $23 million of Bluegreen cost synergies recognized during the quarter or a run rate of $91 million annualized, leaving us well on track to achieve our target of $100 million in cost synergies by the end of 2025. Within our real estate business, contract sales were $721 million, up 10% on a pro forma year-over-year basis, assuming a full quarter of Bluegreen ownership in both periods. Consistent with the fourth quarter, our new buyer mix in the quarter remained at 25% owing to the continued strength of our owner channel after the launch of HGV Max to our Bluegreen members along with the launch of Ka Haku last fall. Tours were down 4% to 175,000, primarily reflecting the tour efficiency initiatives that Mark mentioned earlier, along with ongoing sales center closures related to the hurricanes this past fall. These initiatives improved close rates and were reflected in VPG, which grew 15% to more than $4,100.
We saw growth in both our owner and new buyer channels with particular strength in our owner channel which grew 21% year-over-year. That growth was driven by a combination of our recent initiatives along with the continued contribution from HGV Max and Ka Haku. Cost of product was 12% of net VOI sales for the quarter, up 100 basis points from the prior year. And our provision for bad debt was roughly in line with the prior year at 12% of owned contract sales. Real estate sales and marketing expense was $372 million for the quarter or 52% of contract sales. Real estate profit for the quarter was $138 million with margins of 24% down 200 basis points with half of that coming from the uptick in cost of product and the other half coming from sales and marketing costs. In our financing business, first quarter revenue was $125 million and segment profit was $70 million with margins of 56%. It is important to highlight that the provision statistics do not include $7 million of additional reserves related to our acquired portfolios.
Due to the fact that the reserve was related to our acquired portfolios rather than our underwritten portfolios, it is booked in our financing expense rather than the real estate provision and accounted for the majority of the year-over-year decrease in our financing business margin in the quarter. Looking at our portfolio metrics, our originated weighted average interest rate was 15%. Combined gross receivables for the quarter were $4 billion or $3 billion net of allowance. Our total allowance for bad debt was $1.1 billion on that $4 billion receivables balance or 27% of the portfolio. Our annualized default rate for our consolidated portfolio stood at 10.2% for the quarter, a slight decrease from the fourth quarter's level of 10.8%. Our originated portfolio delinquencies continue to outperform a much more seasonal acquired portfolio, which is a testament to the strength of the HGV brand, increased value proposition from HGV Max, and continued rollout of the best-in-class sales and underwriting practices.
We continue to believe that we are adequately reserved when considering the recent volatility in credit in equity markets. Notably delinquency rates for HGV and legacy BRI portfolios are running below last year. And while we expect the provision rate to build throughout the year given the current operating environment and seasonal trends, we still expect all-in provision to be in the mid-teens for the full year. We also monitor our 31- to 60-day delinquency trends very closely as an early indicator. And we haven't seen any signs of increased stress within our portfolio in recent weeks, but continue to monitor the situation closely. In our resort and club business, our consolidated member count was approximately 725,000 and our net owner growth was just under 1% at the end of the quarter. Revenues grew 10% to $183 million for the quarter, owing to our increased member count and solid member activity during the quarter.
Segment profit was $129 million with margins of 71% as we maintained good expense controls. Rental and ancillary revenues were $187 million in the quarter with a segment loss of $19 million. Revenue growth was driven by increased occupancy resulting in a slight improvement in our RevPAR. Consistent with the fourth quarter, our expenses remained elevated due to higher developer maintenance fees along with higher expenses from point conversions for stays at Great Wolf, as we continue to see great traction with our new partnership program. Bridging the gap between segment adjusted EBITDA and total adjusted EBITDA, JV EBITDA was $5 million, corporate G&A was $37 million, license fees were $49 million, and EBITDA attributable to non-controlling interest was $5 million. Our adjusted free cash flow in the quarter was $185 million, which included inventory spending of $110 million. Our cash flow conversion of 75% was elevated owing to the timing of non-recourse activity under our financing business optimization.
But for the full year, we still anticipate that the conversion rate of adjusted EBITDA into adjusted free cash flow will be in the range of 65% to 70%. During the quarter, the company repurchased 3.9 million shares of common stock for $150 million. From April 1st through April 24th, we repurchased an additional 1.8 million shares for $60 million. Year-to-date 2025 we have repurchased 5.7 million or 6% of our shares outstanding for $210 million for an average of approximately $37. We remain committed to capital returns as the primary use of our free cash flow and believe our shares continue to represent a compelling value at current prices. We believe that our strong balance sheet provides us with the financial flexibility necessary to allow us to navigate the current macroeconomic volatility. Accordingly, we remain committed to our target of repurchasing on average of $150 million per quarter assuming the current macro environment.
We currently have $218 million of remaining availability under our repurchase plan. Turning to our outlook. We are maintaining our 2025 adjusted EBITDA guidance to be in the range of $1.125 billion to $1.165 billion, which assumes the environment remains consistent with what we see today. As Mark mentioned we had a solid quarter that was in line with our expectations and that momentum carried into April. That said, while our direct exposure to tariffs is minimal, the volatility of the past few weeks has nevertheless made the consumer environment more uncertain and is something that we continue to monitor very closely. Moving on to our liquidity. As of March 31st, our liquidity position consisted of $259 million of unrestricted cash and $870 million of availability under revolving credit facility. Our debt balance at quarter-end was comprised of corporate debt of $4.5 billion and a non-recourse debt balance of approximately $2.4 billion.
At quarter-end, we had $100 million of remaining capacity in our warehouse facility. We also had $951 million of notes that were current on payments but unsecuritized. Of that figure, approximately $519 million could be monetized through either warehouse borrowings or securitization, while another $210 million in mortgage notes we anticipate being eligible following certain customary milestones such as first payment deeding and recording. Despite market volatility, ABS markets remain open and functioning. This fact coupled with our $850 million warehouse gives us confidence we can execute on our previously discussed finance optimization strategy. Turning to our credit metrics. At the end of Q1, inclusive of all anticipated cost synergies, the company's total net leverage on a TTM basis was 3.9 times. We will turn the call over now to the operator and look forward to your questions.
Questions and answers
Thank you. We’ll now be conducting a question-and-answer session. Our first question is from Brandt Montour with Barclays.
Good morning everyone. I appreciate you taking my question. Mark, could we start by discussing the consumer? It seems from your commentary that you're not observing any changes in preview package sales or forward bookings for rentals, which one might expect to see some fluctuations in. Other leisure-oriented businesses have reported a degree of instability in their forward bookings. Could you explain why you believe you are not following that trend? Is it related to geographical factors or consumer behavior? What’s your perspective on this?
That's a good question. From a leading indicator perspective, we have a unique advantage that's often overlooked regarding line of sight. For example, 50% of our occupancy comes from our owners, and another 15% to 20% comes from our marketing packages. This gives us data and insights into how to engage those segments. In terms of rental bookings, the typical booking window is about 40 days, while for owners, it's around 177 days, which has only decreased by one day compared to last year. For marketing, that window is about 95 days. This means we have a clear understanding of who will be arriving at our properties much earlier than traditional leisure travel, which is usually booked around 40 days in advance. Additionally, our owners have prepaid, and our marketing package customers have done the same. These factors provide us with visibility and a significant advantage over conventional demand sources.
That's really helpful. Thank you for that. My second question is regarding the mix of new owners versus owned mix. In the first quarter, you achieved an 85% owned mix. For the full year, I believe that will be slightly lower. Additionally, during the summer, it seems that new owner sales tend to be seasonally higher. As we analyze the impressive VPG from the first quarter, do you find it more challenging to sustain such strong VPGs as you transition into a season that focuses more on new owner sales, like summer? Or is that something you can control and plan to manage?
Yes. It is something we can manage. First, I want to clarify that the figure for new buyers is actually between 25% to 30%, not 15%. Additionally, the strong performance among owners significantly impacts that number. We experienced VPG growth from both owners and new buyers. For new buyers, this growth was primarily driven by a 5% increase in average transaction prices. On the owner side, we saw impressive improvements, with close rates up nearly 500 basis points. The mix reflects a strong owner performance while new buyer growth is still being established. We're very pleased with these results, and our team executed exceptionally well. We're experiencing a VPG growth just under 15%. As we progress through the year, we expect the mix to remain relatively similar, anticipating continued strong performance and execution. However, it’s worth noting that while we’re aware of negative narratives surrounding consumer confidence, we haven't observed any detrimental effects in our results yet.
Great. Thanks for the color. Nice quarter.
Our next question is from Ben Chaiken with Mizuho Securities.
Hi. Thanks for taking my question. Dan, nice to have you back. Regarding the balance sheet optimization, you gave some color on the prepared remarks and also in the press release regarding the $951 million of notes that were current on payments then there's the $519 million that could be monetized and then there's the $210 million of additional notes. That still leaves kind of a balance of something around $200 million. I guess, for a three-part question, number one, where is that remaining $220 million or so sit? Part two, do you view all of the $951 million as receivables, you could securitize in the near term? Or is there a portion you would leave in the balance sheet for some reason or another? And then part three, I think the warehouse is full is the plan to securitize those working the warehouse down and then use that $850 million capacity to take down the $950 million? Hopefully, that all makes sense. I can circle back if those two are convoluted. Thanks.
Hi, Ben, thanks. And it's good to be back. With regards to your questions, I don't know where to begin. I think the last one, you effectively answered. But let's jump back to the $200 million. The $200 million is a part of the current unsecuritized receivables. It really pertains to loans that either have no FICO scores for one reason or another, or they're loan balance heavy for another reason i.e. just for lack of a better term, they're not immediately securitizable. That doesn't mean there's not a path. There is a path. This is more of your scratch and dent of nature. So, there is a path to do that. We wouldn't focus on that. We haven't focused on that in the past, just given the advance rate that's typically associated with the scratch and dent issuance. So, that's out there. The other thing to take into consideration is all these metrics are a point in time, right? So to your point the warehouse is drawn effectively not completely drawn at this point in time, but majority drawn.
What we will look to do is to term that out by going to the ABS markets most likely as we approach the summer months. As you've seen, while the markets have been very choppy the ABS markets are definitely open. A competitor went to the market recently and was successful. We anticipate going to the market in the short term. We would just given today again I pause because there's a lot of noise out there, but if we were to go out today, I would anticipate pricing in the range of five to 5.5. Obviously, that'll move with the macro, but that's where we would see it today. Let's see. I think I answered two of your three. Which one did I not answer completely?
Overall, considering the total balance of $951 million, can we view that as being entirely securitizable in the near to medium term? Or is there a part that you prefer to keep on the balance sheet for any particular reason?
The vast majority would be something we would aim to securitize. However, we need to consider the point-in-time concept since there is a certain portion we would retain to ensure we have notes available for replacements in existing deals. Therefore, there is some amount that we wouldn't proactively seek to securitize.
That's very helpful. Regarding VPG, it definitely exceeded expectations. It seems like the success is partly due to Bluegreen HGV Max, which makes sense. Can you share any statistics or anecdotes about the success of upgrading Bluegreen customers? You mentioned the overall close rate for existing owners earlier, which was useful. Do you have similar information for Bluegreen customers, if you're comfortable sharing? Also, are there any Bluegreen sales centers that you're still upgrading or rebranding? Thank you.
Yes. Thanks. No good question. So what I would say is, first of all, VPGs were strong across the legacy business and in particular Bluegreen owners. And so if you look at VPG growth in the legacy HGV DRI world owners and new buyers were up 8%, right? So you can see that Bluegreen owners really outperformed, and the growth there was pretty material. It was over 40% growth in VPG. So two times of what we saw in overall owner VPG. So good performance across the entire company and entire brands, but a really strong outperformance on the Bluegreen side.
Thanks a lot. Appreciate it.
Our next question is from Patrick Scholes with Truist Securities.
Thank you. Good morning. Mark, in previous earnings calls, you outlined several key performance indicators. From my notes, you mentioned expectations of low to mid-single-digit growth of approximately 50 basis points. Could you provide an update on those expectations? Thank you.
Yes Patrick, there was a bit of a connection issue, but I believe I understood your question. Looking ahead for the remainder of the year, we experienced a decline in tour flow for Q1, but we still anticipate growth in tour flow moving forward. The decrease in tour flow is largely due to our initiatives aimed at enhancing the quality of the tours. We are tightening our qualifications and focusing on attracting higher-quality customers. Additionally, we have refined our modeling to better identify buyers who are more likely to purchase and have the means to pay. On another note, some of the Bluegreen sales centers affected by the hurricane will take longer to reopen than we initially anticipated, and we are actively working with our teams to facilitate those reopenings. However, working with insurance companies means some of this timing is out of our hands. Regarding the VPG, we performed better than expected in the first quarter. While there is considerable uncertainty among consumers, if market conditions remain stable, we project mid-to-higher single-digit VPG growth for the rest of the year.
Our next question is from Stephen Grambling with Morgan Stanley.
Hey. Thanks. Welcome back, Dan.
Thank you.
Just to dig into a couple of things in the opening remarks from you Mark. I think you gave a couple of these strategic initiatives. And two of them, one was more flexible financing; one I think you said new features to drive engagement. I was hoping you could just maybe expand on each of those. On the flexible financing, is that effectively improving the rate? Is it improving the amount down? And then on the features to drive engagement, maybe if you can just elaborate on maybe the cadence of what you're doing and then the cadence of when we'll start to see that?
We are currently standardizing our financing program across the company. Bluegreen has its own financing program, and our legacy business had a different one. Over the years, our financing grids have become quite complex. Our goal has been to simplify this and create a financing grid that is appealing to new customers while focusing on generating additional cash right at the point of sale. This is a significant driver for us. We're also incentivizing customers based on the product type they are acquiring. We are in a strong inventory position and are looking to move as much as possible, balancing our inventory and using our financing grid to direct buyers to specific types of inventory. Our initiatives have concentrated on improving tour quality and enhancing our value proposition. I previously discussed the tour quality, and when it comes to our value proposition, we are committed to delivering even better value than what we currently offer.
There is no single solution; rather, it is a combination of several initiatives we are focusing on. Part of this involves investing in marketing upfront to generate additional revenue in the future. I don't perceive there to be a demand shock, and our current urgency is crucial in this environment to continue attracting new buyers while increasing value for our owners. We believe the benefits of these efforts are already reflected in our scores, and we expect further advantages from our initiatives in the latter half of the year. Together, we are confident that these strategies will help protect our business from any potential macro disruptions.
Mark and I would like to add that, in relation to financing, it is crucial to simplify the messaging and discussions at the sales table, reducing any friction. We are also integrating the underwriting processes. Bluegreen, which we have mentioned a few times previously, offered upgrades with no additional cash down, a common practice in the industry. We are aligning this with the underwriting procedures of HGV and the legacy Diamond portfolio that require additional investment to ensure that customers remain engaged with their mortgage and, more importantly, with the product itself. We are optimistic that this combination will enhance our portfolio performance as we progress through this year and into the future.
Our next question is from Lizzie Dove with Goldman Sachs.
Hi there. Thanks for taking the question. Just to kind of zoom in a bit on the consumer. I'm curious if you've seen any kind of divergence between different geographies within the US in particular strength in areas versus others or any signs of kind of trade down between different products? Just any other color there would be helpful.
Preparing for today's call, I examined market results and noticed outstanding performance across various regions, not limited to specific geographies. For example, our teams in Hawaii delivered exceptionally well, with Maui experiencing a 40% growth, returning to pre-fire levels. Both our domestic and Japan teams in Oahu also outperformed, and the Big Island teams in Waikoloa showed strength as well. New York and D.C. had strong performances, particularly from our East teams, and Orlando benefited from improved execution. In mid to smaller markets, our joint venture with Bass Pro in Big Cedar did well, and the Carolinas, Arizona, and Texas also performed strongly. Our focus has been on the consumer, and while we indicated last year that the new buyer wealth cohorts had stabilized, they haven't improved significantly. We have adjusted our approach to better navigate the ongoing challenges of cumulative inflation and market uncertainty. Therefore, we’re tightening up our qualifications. It’s encouraging to see our owners and members continue to perform well, and we noted modest growth in VPG from new buyers, indicating that our initiatives are beginning to yield results.
Our next question is from Chris Woronka with Deutsche Bank.
Yes. Good morning. Thanks for taking the question. Mark just for a moment returning to kind of a downside scenario in the economy that we're still thinking about. I know in prior cycles none of which are exactly alike but there was some discounting by the resort sector and I think there's a perception that if that happens it upends your value proposition a little bit in terms of getting folks on tour. So any thoughts there? Any contingency plans? Anything you're seeing in any markets yet that gives you pause for concern on that?
I would say we haven't observed any issues with our package pipeline, which I consider a strong indicator. Our value proposition remains compelling because we subsidize guests to visit our properties and participate in sales presentations. In the current high-rate environment, this value proposition is even more pronounced. We've seen robust execution, with our dated packages—those that have confirmed dates and are scheduled for travel—rising by 22% from Q4 to Q1. Regarding a potential downturn, we are in a solid position; our business is better off now than it was previously due to built-in advantages; 50% of our EBITDA is recurring, we maintain a strong balance sheet, and we have excellent brands and partnerships with companies like Hilton, Bass Pro, and Choice, which help us create the largest pipeline of potential new buyers in the industry. Our members show incredible loyalty, with tens of thousands of owners staying with us for decades; 70% have paid off their mortgages, and 90% live within a four-hour drive of our resorts.
I believe we are ready for various outcomes. Importantly, our business model allows us to generate demand proactively; we do not wait for customers to come to us. We actively reach out and build relationships to drive future demand. While it's challenging to predict the full impact of ongoing policy changes, I strongly believe the trend towards prioritizing experiences over goods will persist and may even accelerate in the current climate. I'm optimistic, but I also recognize the uncertainty in the current landscape. Each day brings new developments, but we must focus on what we can control, and that's our current approach.
And Chris, I would add that Mark has highlighted many of the value additions we've made to our product offering over the past few years. Even going back to 2019, prior to the significant increases in hotel ADRs, we had a strong value proposition. The average transaction price we've seen has increased over the years, keeping pace with inflation, unlike the rapid growth in ADRs. This means that not only have we improved our product, but from a financial standpoint, we continue to offer significant value to the end consumer. Therefore, there would need to be a considerable decrease in what you see in hotels for us to believe that our offering isn’t a great value for the end consumer.
Okay. Yes. Fair enough. Thanks guys. Appreciate it.
Thank you. There are no further questions at this time. Before we end, I would like to turn the call back over to Mark Wang for any closing comments.
Well, thanks, everyone, for joining us today. And I want to thank all of our team members for going above and beyond to meet our owners' needs and deliver outstanding vacation experiences. And I also want to thank our owners who make vacation a priority and entrust us with creating those memorable experiences for themselves and their families. Have a great day. Thank you.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.