Prepared remarks
Greetings, and welcome to the Travel + Leisure Second Quarter 2025 Earnings Conference Call Webcast. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Erik Hoag, Chief Financial Officer. Please go ahead, sir.
Thank you, Kevin. Good morning to everyone. Before we begin, we would like to remind you that our discussions today will include forward-looking statements. Actual results could differ materially from those indicated in the forward-looking statements, and the forward-looking statements made today are effective only as of today. We undertake no obligation to publicly update or revise these statements. The factors that could cause actual results to differ are discussed in our SEC filings and in our press release accompanying the earnings call. You can find a reconciliation of the non-GAAP financial measures discussed in today's call in the earnings press release available on the Investor Relations website. This morning, Michael Brown, our President and Chief Executive Officer, will provide an overview of the second quarter results and our longer-term growth strategy. And then I'll provide greater detail on the quarter, our balance sheet, and outlook for the rest of the year. Following our prepared remarks, we'll open up the call for questions. Finally, all comparisons today are to the same period of the prior year, unless specifically stated. With that, I'm pleased to turn the call over to Michael Brown.
Good morning, and thanks for joining us. Travel + Leisure delivered another solid quarter of revenue and adjusted EBITDA growth. Our strong adjusted EBITDA and free cash flow allowed us to return $107 million of capital to shareholders in the quarter. This performance underscores the strength of our brands, the resilience of leisure travel, and our owner base, and the disciplined execution of our strategy. Against the dynamic macroeconomic backdrop, our teams remain focused on driving growth, managing costs, and delivering exceptional experiences to our owners, members, and guests. In the quarter, we generated over $1 billion in revenue, $250 million in adjusted EBITDA, and $1.65 in adjusted earnings per share, all up year-over-year. Our results were driven by continued strength in our Vacation Ownership business, which more than offset softer performance in travel and membership. We saw a healthy year-over-year growth in VOI sales, with gains in both tour flow and volume per guest.
Notably, volume per guest of $3,251 was above the high end of our guidance range, and adjusted EBITDA margin remained consistent with the prior year at 25%. These results support the core foundation of our business: a resilient customer base built around leisure travel, a compelling value proposition, and consistent returns to our shareholders. Demand remained strong across our core timeshare business. We see encouraging engagement from consumers as tour growth improved sequentially from the first quarter and 3% compared to 2024. The resilience of our platform is directly related to the quality of our customers. There's been plenty of noise around the economy, but from where we sit, our consumers are healthy and prioritizing travel. Spending on leisure travel is expected to grow mid-single digits per year over the next five years. Our business is built on recurring behavior, and less so on short-term trends, making us less sensitive to the macro economy as we benefit from a highly visible recurring revenue base.
More than 75% of our revenue is tied to predictable sources like owner upgrades, financing, and management fees, which leads to a nearly $20 billion pipeline of future potential revenue over ten years. We see our strategy play out through our bookings, sales tours, and owner engagement metrics. Our owners are traveling, supporting what we've long believed: that vacations are not discretionary; they're essential. We have seen no significant change in buyer behavior related to booking pace, VPG, and portfolio performance. Booking pace is relatively consistent with the prior year. And with a 109-day average booking window, we have clear visibility into the remainder of the year. VPG performance continues to be strong, and our portfolio remains stable. Our owners know what they are getting. They've already planned for it, and 80% of them have fully paid for their ownership. Today, we serve more than 800,000 owner families with an average tenure of 17 years.
Here are some key characteristics of our owner base: the average household income for our owners is approximately $118,000. The average FICO score of our $3 billion portfolio is above 720. Since 2020, we have seen sub-640 FICO loans decline 4 points as a percentage of the overall portfolio. The average FICO score of new originations is 746. This is an over 20-point increase since we updated our credit quality standards. Our owners take an average of 4 to 5 vacations annually, with more than 50% of their vacation time being utilized through their ownership. We are seeing consistent interest from younger generations, with over 65% of new buyers coming from Gen-X, millennial, and Gen-Z households. Our product delivers exactly what these new owners want: flexibility, convenience, and personalized experiences. During the quarter, we continued to invest in technology, marketing, and product innovation to enhance the customer journey and extend our reach.
Our Club Wyndham app, which offers frictionless engagement, now has 162,000 downloads and accounts for 19% of bookings. Additionally, we are preparing for the launch of our WorldMark app in Q4. We are progressing with investments in AI on our web and app channels, driving recommendations for personalized experiences and seamless booking processes. During the quarter, we announced an exclusive marketing partnership with Hornblower focused on creating memorable experiences for our owners, as well as new owner tour generation. Hornblower Group is an experience-based tourism leader across 22 destinations in the United States, Canada, and the U.K. Looking ahead, we are focused on growing the core vacation ownership business, leveraging data and technology to enhance the customer experience across all platforms. We are taking targeted revenue and cost actions to mitigate the headwinds in our Traveler Membership segment, leaving us well positioned to deliver sustainable growth and consistent returns.
Now turning to execution on our multi-brand strategy. This strategy is not just about scale; it's about customer segment and geographic expansion. Our Club Wyndham and WorldMark brands will continue to be the cornerstone of our vacation ownership business, along with our Blue Thread partnership with Wyndham Hotels. In June, we expanded our Margaritaville footprint with a new sales location in Nashville on Broadway and a new marketing channel on the Margaritaville cruise ship. We launched and expanded the Accor Vacation Club with the formation of a new Asia-based club; the first resort is the Novotel Nusa Dua in Indonesia. Last week, we announced our newest Sports Illustrated Resorts location in Nashville, Tennessee. Located on Music Row in the heart of Midtown, just one mile from downtown, the planned resort will feature 185 units and is expected to open in the spring of 2027. These new brands will help us expand into key markets, reach new audiences, and offer experiences suited to their lifestyles.
Our strong free cash flow allows us to invest in the right places: brand, digital, and targeted inventory. We are confident these investments will continue to drive value. Alongside these investments, we continue to consistently return capital to our shareholders through our dividend and share repurchase program. Since then, we have returned $2.7 billion to shareholders. Before I hand it over, I'd like to take a moment to welcome Erik Hoag, our new Chief Financial Officer. Erik brings a strong background in strategy, operational finance, and capital allocation. Erik has hit the ground running since he joined the company. In his first two months, he's attended five conferences and met with 49 investors over 27 meetings. I'm confident his leadership will help us continue delivering disciplined execution and long-term value for our shareholders. With that, I'll hand it over to Erik to walk through our financial performance and capital allocation in more detail.
Thanks, Michael, and good morning. Let me start by saying how excited I am to be part of Travel + Leisure. This is a company with a strong leadership team, a highly recognizable brand portfolio, and a resilient business model that delivers dependable cash flow and long-term value creation. In my first few months, I've been especially impressed by the financial discipline and operational focus embedded across the organization. This came through clearly in our second quarter results with strong revenue and adjusted EBITDA growth, alongside robust adjusted free cash flow. I'll walk through the quarter's key drivers and highlight how we're deploying capital to drive shareholder value. Revenue for the quarter was $1.02 billion, up 3% year-over-year, driven by strong VOI volume and VPGs that exceeded our expectations. Adjusted EBITDA was $250 million, up 2% over the prior year and at the midpoint of our guidance range.
This translates to a 4% adjusted EBITDA growth for the first half of the year. Adjusted earnings per share grew 9% in the quarter, driven by strong performance in vacation ownership and the benefit from ongoing share repurchases. Turning to the Vacation Ownership segment, our core growth engine, the business delivered accelerating revenue, rising tour flow, historically high VPGs, and double-digit growth in average transaction size. Revenue grew 6% to $853 million for the quarter, driven by a 3% increase in tours and VPG of $3,251, up 7% from last year. The increase in average transaction size reflects strong consumer demand, effective upsell strategies, and continued sales force productivity across our resorts. Adjusted EBITDA grew 6%, with margin performance remaining steady, underscoring the health and the consistency of the platform. We are also making disciplined progress with our inventory pipeline, with several key resort projects underway to support future growth while maintaining our capital-light mix.
Our loan loss provision and delinquencies were in line with expectations, and we remain on track to deliver a full year provision of 21%. Credit quality remained strong in the quarter with new origination FICO scores above 740, which reflects our consistent and disciplined underwriting approach. Our second quarter delinquency trends moderated after the uptick we noted last quarter. With no signs of material deterioration, we're confident in the portfolio's strength. Our provision has historically ranged from the high teens to the low 20s as a percentage of VOI sales, and we see potential for this to trend below 20% over time, enhancing capital efficiency and supporting durable free cash flow. In our Travel and Membership segment, revenue was $166 million for the quarter, down 6% year-over-year and adjusted EBITDA declined 11% to $55 million. The exchange business continues to face industry consolidation headwinds.
Additionally, recent M&A activity disrupted transaction volumes from certain affiliates and was not anticipated in our original guidance. While not the sole driver of the underperformance, the impact was meaningful, and we remain focused on maximizing cash flow and operational flexibility with an emphasis on long-term shareholder value. Turning to cash generation and capital deployment. We generated $123 million in adjusted free cash flow and $353 million in operating cash flow in the first six months of the year, supported by strong sales efficiency, capital-efficient sales execution, and the ongoing contribution of our consumer finance portfolio. These factors, alongside both our highly recurring revenue mix and capital-light development strategy, drive consistent and dependable cash generation even in a complex macroeconomic and political environment. During the quarter, we returned $107 million of our adjusted free cash flow to shareholders, $37 million through dividends and $70 million in share repurchases, retiring more than 2% of our shares outstanding in the quarter.
Our capital allocation strategy remains unchanged: reinvest in high-return growth, maintain a resilient balance sheet, and return excess cash to shareholders, all while preserving financial flexibility. We continue to evaluate reinvestment returns vigorously, prioritizing initiatives where we see strong IRRs, capital efficiency, and clear pathways to shareholder value. Our liquidity position remains strong. We ended the quarter with over $800 million, including $212 million of cash and cash equivalents and $596 million available on our revolver. We ended the quarter at 3.4x levered and with normal seasonality, we expect our leverage rate to slightly increase in the third quarter and then end the year below 3.4x. During the quarter, we amended our $1 billion revolving credit facility with improved terms. Yesterday, we completed our second ABS transaction of the year, raising $300 million at a 98% advance rate and a 5.1% coupon, the lowest we've seen since 2022.
We continue to actively manage maturities and expect to refinance the $350 million note coming due in the fourth quarter. Looking ahead, we continue to expect full year adjusted EBITDA to be in line with our prior guidance, supported by the strength of our vacation ownership business. We expect travel and membership to remain challenged through year-end. That said, we are committed to executing on our core business, launching new brands, delivering strong free cash flow, and allocating capital in ways that enhance shareholder value. For the third quarter, we expect travel and leisure adjusted EBITDA to be in the range of $250 million to $260 million. Vacation Ownership gross VOI sales are expected to be in the range of $650 million to $680 million with VPGs in the range of $3,200 to $3,250. For the full year, we continue to expect adjusted EBITDA to be in the range of $955 million to $985 million, gross VOI sales between $2.4 billion to $2.5 billion, and VPGs in the range of $3,200 to $3,250, an increase from our prior range of $3,050 to $3,150.
Please refer to our earnings material for full details and underlying assumptions by segment. Thank you for your time and continued interest in Travel + Leisure. I look forward to connecting with many of you in the weeks ahead. Kevin, we can now open the line for questions.
Questions and answers
Our first question is coming from Chris Woronka from Deutsche Bank.
Erik, welcome. We're looking forward to working with you. So I guess, Michael, maybe start with the kind of the more obvious question this quarter on the travel and membership side. I know you mentioned that there was some M&A impact with partnerships. But do you feel like visibility of that segment is declining? It used to be very stable and predictable within $1 million or so? And if so, how confident are you that you can turn this around? Or are you in some ways, possibly considering something more strategic with that segment?
Chris, let me recap Q1 or the first half of the year. So we recognize the two components of the Travel and Membership decline. In the organic side of the business, yes, we saw a decline as it relates to exchange transactions, a conversation we've been having on this call for several years now. That side of the business remains challenged through consolidation and the fact that the way bigger clubs are doing business has changed. And we've done a pretty significant job over the last few years stemming the tide of that. In fact, if you remember, last year, we actually had growth in this segment. Over 50% of the decline in the first half of the year was based on this component of the business. The other piece, which Erik mentioned, was there was consolidation in the space, and that impacted those related to affiliates of ours, and that obviously was an unforecasted impact in the first half of this year.
As we digest that and look at new alternatives on how to address and mitigate the impact of that transaction, but also just the general trend of what's happening on external exchange transactions, there are a number of measures we continue to take. We want to grow the Travel Club business, which grew 7% in Q2 as far as transactions. We continue to look at innovative ways to deploy our inventory and to grow revenue on that side of the equation. And then obviously, we manage costs associated with where our top line goes. I think we've been very clear that we understand the structural challenges of the space. But we've been very proactive over the past few years, and we will continue to look at smart strategic investments or alternatives to make sure that we're doing the right thing for this business and creating our objective to get back to a growth trajectory over time here.
Just as a follow-up. I think you mentioned a double-digit increase in average size of transaction in the quarter. A question on that is kind of in the context of financing? And how does that play into when you think about transactions getting bigger, propensity to finance in the context of a lot of wealth effects being generated with the stock market, and maybe other forms of real estate? Does that change the calculus at all for your, I guess, your average customer in terms of that propensity to finance or what's driving that larger transaction size?
We haven't observed any changes in our willingness to finance. The statistics remain very consistent. In the second quarter, there are two key components to consider. First, we are consistently implementing measured price increases over time, which contributes to a rise in the average transaction price. The second aspect, which we have discussed in our prepared remarks, is related to greater owner engagement and experiences. We believe we are beginning to see the effects of these elements as customers continue to take 4 to 5 vacations a year through their ownership with us, dedicating about 50% of their vacation time to Wyndham. This indicates that customers are purchasing more because they are satisfied and enjoying their ownership. Therefore, it reflects a combination of price increases and continued loyalty and commitment to this type of leisure travel.
Next question today is coming from Lizzie Dove from Goldman Sachs.
You increased the VPG guidance, which is a strong figure for the second quarter, but you didn't raise the gross VOI sales number. Should we assume that tour growth is somewhat lower or is there another reason? I noticed that telesales were a bit lower in the second quarter than anticipated. I'm interested to know what contributed to this decision.
Really, really the factor is we wanted to recognize the very strong VPG performance in the first half of the year, and that led to our raise for the full year. I think what that really says, Lizzie, is that we have greater confidence that our gross VOI is going to be at the mid to maybe the top end of that range. So at this point, being halfway through the year, knowing that we're entering July as one of the biggest months of the year and the same with August with summer travel, we thought we were better off to simply be more confident in the top half of the range at this point, and we'll see where we are in Q3 at the end of Q3. But what I would say is both tours being up 3% in Q2, 2% for the first half, that's showing sequential acceleration. We were quite pleased with our Q2 tour performance, and we think that tour increase will continue in the second half. And obviously, our VPG raise of guidance reflects what we're already seeing and that we don't see the consumer weakening in the second half of the year.
Got it. And then on the delinquency side, I think last quarter, you said March ticked up a little bit, but then you saw an improvement in April. Curious how that's been tracking over the last few months and into July. And you mentioned there may be some opportunity for the provision to kind of trend below 20% over time. Just curious, these kind of steps to get that timing would be helpful to know.
Erik Hoag speaking. You are correct. Earlier this year, we experienced higher delinquencies in the first quarter. However, they began to moderate toward the end of that quarter, and we have seen that trend continue through the second quarter and into the first half of July. We have set our full year provision at 21%, which we believe is a strong position. Regarding the long-term goal of reducing the provision to the teens, there are a couple of points worth mentioning. First, we maintain disciplined underwriting standards with FICO scores above 740, and we have consistently observed improvements in the credit quality of our new customers. Additionally, we are focused on enhancing the usability of our app, which has led to increased adoption among our customers, helping them easily book vacations. One more thing related to the provision, after 60 days, I've realized that, as Mike mentioned, I've engaged with about 50 investors over the last two months. We have a highly effective and efficient inventory recovery process in place. When delinquencies arise, we can recover the inventory effectively and reprice it at favorable rates, maintaining a cost of sales rate under 10%. This strategy has proven to be very effective for us.
Our next question is coming from Patrick Scholes from Truist Securities.
Welcome, Erik. Michael, I'll start off with a question for you. You touched briefly about the health of your consumer. I'm wondering if you can dig down a little bit more. You talked about average household income of about $120,000. But I'm sure within the average, you probably have some, say, $80,000 and some $150,000 and above. Talk about sort of at the various ends of the spectrum, what are the behaviors and propensity strengths and weaknesses, any noticeable differences between the lower end and the upper end within your customer network and potential customer network?
Certainly, Patrick. I'll address this from a few angles. Firstly, we assess the performance of household incomes through FICOs and our default curves. This insight influenced our decision, post-COVID, to raise our FICOs to 640, which has subsequently raised our average FICOs to 746. We've observed that with higher household incomes, there is a notable improvement in performance, whereas lower incomes tend to see higher delinquencies. Interestingly, a trend we've noticed is that as household incomes increase, there's a greater tendency for prepayment of loans. While we appreciate higher FICO sales and encourage ownership, we do see a decrease in the number of higher FICO individuals during the first year of ownership. Another perspective to consider is the distinction between existing owners and new owners. In an uncertain economy, the new owner segment is typically the first to reflect any economic shifts.
In the first half of this year, our current owners demonstrated strong engagement and continued to make significant purchases. Our new owner business has also performed well, and we were satisfied with our tour flow. Specifically addressing your question, when we compare our metrics for new owners to the pre-COVID figures from 2019, we see a substantial increase in close rates, VPGs, and transaction sizes. This suggests that, contrary to concerns about a potential weakening economy showing up in our new owner segment, the performance has actually remained strong after the first six months.
And then I do have a follow-up question for Erik. Erik, with the VPG expectation going up, what are your expectations for the buyer mix in those expectations for closing rates versus your prior guidance for VPG? And I think on the last earnings call, you had expected the new owner mix or Mike has expected the new owner mix still to be around towards 35%.
We expect to see an acceleration in our new owner mix in our financial forecast, with our long-range target remaining at 35%. In the second quarter, we were at 30%, and our forecast anticipates some improvement in the second half of the year.
The next question today is coming from Stephen Grambling from Morgan Stanley.
Just a follow-up on the new owner mix improvement. I guess are there any things that you're doing and that you're thinking about to help drive some of the incremental new owners or anything that you're thinking about in terms of trying to improve the conversion rate on new owners as we think about initiatives going into the back half of this year or even into next year?
Yes. So just add on to what Erik was saying: we've always communicated this percentage, and I just want to make sure everyone's got the context of it. We had an incredible first half of the year on our owner side of the business, which is naturally going to push down our percentage of new owner percentage. We had a really good first half of the year as it relates to newer business. It just happens when you perform so well on the owner side, our target of 35% naturally is further away from 35%. And we're going to continue to get to our long-term target. Our short-term target is 35%. And if quarter-by-quarter we have strength in one segment, it will fluctuate. Remember, I believe it was first quarter last year, maybe it was second that we were at 38%, 37%, and that was just a quarter. So related to some things we're doing as it relates to driving new owners, there's a lot feathered throughout the script related to that.
But I really want to focus on: number one, we continue to focus on getting the right partners. We were pleased with the announcement in Q2 of one such partner in Hornblower. We also believe that the addition of these new brands, Margaritaville, which we're reinvigorating, is up double digits in sales year-on-year. The addition of Accor, up double digits in sales year-on-year, and Sports Illustrated launching new sales later in the year. All of these are going to be bringing new owners to our overall ecosystem. And lastly, just in addition to all of that, we have six regions, and each single one of them is out doing smaller partnerships in their region that are more pertinent to their region. And all that put together, I do just want to put a stamp on, I think you mentioned something about performance of new owners. I think our close rates are up roughly 11 percentage points from pre-COVID level. So our teams are performing well above where they were pre-COVID. And I think it's a combination of having a great team, very focused on execution and raising our marketing standards.
Our next question is coming from David Katz from Jefferies.
Thanks for all the commentary so far. I noticed that the Accor brand seems to be more of an international play. And I wonder if you could give us some updated thoughts on what you think the international opportunity or TAM really is? And at what point does it become an increasingly meaningful driver of the enterprise in total?
There are two aspects to consider here. First, Accor is the largest international hospitality operator outside the United States, if my information is accurate. The brand is influential and has a variety of brands, and its total addressable market is comparable to the leading hospitality companies globally. That's the positive side. Additionally, the integration with their teams in the Asia Pacific region and considerations in other areas has been very supportive of our growth, which is significant as it helped us announce our first resort about 14 months after acquiring the brand. On the other hand, timeshare is predominantly strongest in the United States. We have a well-established product with 30 years of history, and the industry has shifted primarily toward hospitality-branded companies. Customers are very loyal to brands like Wyndham, Hilton, Marriott, Disney, and Holiday Inn. For our Margaritaville brand, the industry is over 80% hospitality-branded.
The regulatory environment safeguards consumers and provides them with assurances regarding their ownership and protecting their purchases. Therefore, we remain very optimistic about the U.S. market and our Wyndham brand. We also see incremental opportunities outside the U.S. with the core. We consider most of these new brands, whether it's Accor or Sports Illustrated, to have sales potential in the range of $200 million to $400 million. However, when you combine four or five of those brands, it indicates a growth trajectory over five to seven years that could help us sustain our current growth rate over time.
Understood. And just to follow that up. When we think about international sales, maybe $1 of sales or $100 of sales, should we think about the economic intensity in terms of what you earn being similar, better, or worse than what you have here in the U.S.?
I would expect it to be similar as far as profitability margins. I would also expect it to be similar three years from now to what it is today as far as the mix; we do about 90% of our revenue in the U.S. and about 10% internationally. So I wouldn't expect any significant trajectory or incremental risk for currency fluctuation as a result of our expansion. Our objective, back to Stephen's question and tying in yours, is we want to look for new customers geographically, database-wise, and the core provides us both those avenues.
Your next question today is coming from Ben Chaiken from Mizuho.
To start off, could you remind us about the various factors impacting the second half of the year? If I'm correct, you began selling Sports Illustrated in the third and fourth quarters. Could you provide some insights on the timing and scale of that, along with any other relevant considerations? The underlying question is that before today, there appeared to be an expected increase in contract sales for the second half. I would like to explore what those considerations are. Additionally, I have a follow-up question.
Of course, Ben. And the implication that you're reading through is correct. The anticipation on the back half of the year is that we would be lapping tough comps in the first half of the year on tour flow. So year-on-year, tour flow increases in the latter half of this year. You combine that acceleration with an increase of VPG guidance. Diving back into Lizzie's question: you start to see a lot more confidence on the high end of the VOI range, which, in turn, gives us confidence that continued softness on the Travel and Membership segment can be covered, ultimately leading us to confirmation of our guidance range on adjusted EBITDA. So you should expect to see continued strength on the VOI side, covering off any weakness we see on the travel and membership side. And albeit only three weeks into July, I think it's safe to say that the trends that we've seen in Q2 on consumer resilience, key KPIs that led to a good Q2 portfolio performance, VPG, booking patterns, trends we saw in travel membership, all of those have remained consistent in the first three weeks of July, a reminder that our largest month of the year, those trends are consistent with what we saw in Q2.
Got it. And regarding Sports Illustrated, doesn't that start to have an impact in 2025 as well, benefiting you in the latter half of the year?
Yes and no. Yes, we will open in the spring of 2026. We expect to start sales at the end of 2025, so we can, pun intended, put our first points on the board. But as far as meaningful bottom line, not at all. Continuing to grow Accor this year, continuing to grow Margaritaville, and continued excellent execution on Club Wyndham will be the determinant of how we end the year and where in our guidance range we will finish.
Understood. And then for my follow-up, maybe just stepping back a little bit on some of these new projects. Maybe you could help us understand the importance and why you're excited about the new Margaritaville in Orlando, opening in '27 as well as the Sports Illustrated in Nashville, whether it's strategically or geographically why it's important to the network?
Yes. Ultimately, I zoom way out and just look at how hospitality is transitioning, where people are attaching their individual lifestyles to the way they want to spend their leisure time. I don't know exactly the year. I probably should, but Margaritaville was a song and a drink a decade ago. And today, it's a hospitality company with dozens of hotels. Why? Because people love to listen to music and have a drink in their hand on the beach. Leisure travel has become an expression of that lifestyle, and you transition that across just what's illustrated in the affiliation excitement and passion people have for college sports, and we're simply meeting consumers where they are today. Most importantly for our business, especially being direct marketing, is we need to constantly be finding incremental database, incremental addressable markets that we can't reach otherwise. And that's why we have aspirations on each of these not to become the behemoth that Wyndham is today, which will continue to grow.
That's where our strength is. But adding $200 million to $400 million of sales with an individual brand that has a unique database that we otherwise wouldn't reach, that's why I'm excited. And a year ago, we shared with you our aspirations. It's a year later; we're double-digit growth in Margaritaville, we are double-digit growth in Accor, and with Sports Illustrated coming, those are all going to have outsized growth to our total VOI sales projections that we have today.
Your next question is coming from Brandt Montour from Barclays.
I want to ask a more detailed version of a previous question regarding the second quarter and new owner sales. Reflecting on March and April, as you finished the first quarter, you mentioned that new owner sales trends appeared slightly soft. However, it seems things turned out well for you, and those trends continued into the second quarter. With the shift in the sales mix during that quarter, I'm curious if you strategically focused more on repeat customers, which may have contributed to maintaining a higher-quality new owner tour and sustaining those metrics. Does that make sense?
Let me return to my commentary from the end of Q1. We had just gone through Liberation Day, and there was a lot of anxiety about the uncertainty in the macro economy. Now that we've completed three months of the quarter, not much has changed. Our strategy remains the same, and I'm not going to push my team to reach a 35% target. We're focused on executing our business. If we hadn't mentioned the 35%, it wouldn't even be a topic of discussion, as companies are operating anywhere between 30% and 40%. It’s possible to run a successful timeshare business within that range. We will remain steady in our approach to acquiring new owners. If we see fluctuations down to 30% or up to 40%, we are committed to being a consistent presence in this industry over the long term. The second half of this year is set for 35%, but hitting 32% or 33% would not be a concern, nor would I get overly optimistic at 37% or 38%. The regular process of managing marketing efforts means we will eventually reach 35%. Maintaining a dedicated sales and marketing team without making abrupt changes in the middle of quarters is essential for the overall business. Our percentage in Q2 was driven by natural dynamics; we didn't take any special actions to alter our performance in new ownership. The key performance indicators are robust and well-positioned for long-term success.
That's super helpful and crystal clear. This is a follow-up and more of a mathematical question. I understand that there isn't a strict target for new owners in the second half. However, if you aim for sequential improvement, what gives you confidence that you can achieve that while also maintaining VPGs consistently as tour flow increases? It seems to me that if you improved the new owner mix during the second half, it would likely lead to sequential pressure on VPG. Perhaps I'm misunderstanding something.
Yes, let me focus less on the percentage and more on whether we are growing our tour mix, surpassing our more challenging comparisons, successfully executing our new partnerships, and launching our new channels and in-house opportunities on schedule. In the first three weeks of July, our marketing teams on the new owner side have been performing exceptionally well. They are effectively engaging with new partnerships and activating in key regions during this critical new owner period in July. So, setting percentages aside, the new owner channel is expanding as we intended. We do anticipate a need for acceleration in the third quarter compared to the 3% growth in the second quarter and the 2% year-on-year growth in the first half. Early signs indicate that we are on track for that acceleration. We've raised our full-year VPG guidance, and a major goal for the second half is to increase tour flow while maintaining VPGs at the levels seen in the second quarter, which is a balancing act. Our team is currently managing this balance very effectively.
Our next question is a follow-up from Patrick Scholes from Truist Securities.
Great. Just a quick follow-up question on the Sports Illustrated brand. Just give us an update on when you expect Alabama to open? It sounds like Nashville will be next year, but where do you stand with Alabama? And then specifically on Nashville. How is that being financed? Is that asset light? Or is that something that you're putting perhaps partially or fully on balance sheet?
So let me hit each of the markets one by one. Nashville is a conversion property. It will be just in time inventory to match revenue to sales, 185 units opening in the spring of 2026, and the expectation is to start sales at some point in Q4 this year. Tuscaloosa is a purpose-built project, which we've gone through the permitting process, which put us about a quarter behind from our original expectations. So it's going to be early 2027 for delivery. I would expect to split those two goalposts is that we will do another announcement this year on a third Sports Illustrated resort, more than likely to be conversion, but more to come on that. We told you on the last call we would announce by this call; we did. I'd expect that we'd do one more announcement this year for our third location, which again, I'd expect to be just in time, and I expect to be conversion as well.
We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.
Thanks, Kevin, and thanks again for joining us today. We're proud of what our team has accomplished so far this year and are excited about what's ahead. We remain focused on executing our strategy, driving long-term value, and navigating the market with discipline and agility. As we look forward, we're confident in the strength of our business, the resilience of our model, and our future opportunities. We appreciate your time today and look forward to keeping you updated on our progress in the quarters to come. Thanks. Have a great day.
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