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Travel and leisure forecasting a rebound in it's timeshare business. Not really a rebound. It's actually continues to see strong games year after year. It's done well in this sector. The company does see travel and membership revenue falling in the second half of the year. Shares are near twenty twenty two levels, so they've really that's where you've seen
a rebound. Joining us now is Mike Brown, the president and CEO of the company, And Mike, you know, I'm looking at the numbers that just get better and better and better every year in terms of estimates, but travel has been a worry, especially for lower end consumers this year. How does it look to you?
Well, for us, we've seen I think the two words I describe or resilience and consistency. We saw throughout the second quarter. Why there was some wobble early in the quarter from hotel groups, ours continued to stay strong and our consumers, who typically book about four months prior to the summer travel, they own their vacation already, they've planned
for it, so they're going to use it. And we didn't see any wobble for us at any point in the second quarter, and then as we look already into the third quarter, travel remains consistent and steady for the next ninety days.
Interesting. So you have a very unique business model, if you want to call it that. So, you know, unlike talking to some of the peers that we would consider in the travel industry, like you said, you have a much more set sort of membership base. So I mean, do you describe yourselves as selling time shares? Is that or do you phrase it differently?
No, it's time share, Some people call it vacation ownership, shared ownership. Either way, the fundamentals are very straightforward. Is you prepay your vacations and in times in rising prices like we've seen the last three years, the value you get in your ownership is just super noticeable. For families who are looking to preserve the value of their vacation dollars, they're definitely going to go. And what we've seen this year is as prices have risen for hotel rates or
vacation rentals, they've seen incredible value in their ownership. And for our owner base, which is over eight hundred thousand, eighty percent of them have fully paid for their ownership. So there's no reason for them not to travel. Usually the only decision they make are are they going to fly or are they going to drive? And even in those trends, we haven't seen a change. So value flexibility and they fully paid for it. So why not get on vacation this summer.
That's interesting. So when these airlines, the big airlines come out with earnings lately, what they're saying is it's their higher income consumer, it's you know, premium economy, it's the business class tickets that are doing well. What's your target market at travel and leisure? Who are you selling these properties to?
So as we came out of COVID, we changed our approach. We saw that our business was most efficient at a six hundred and forty FICO and above, and that's so our minimum standard. But our average FICO for new purchasers is seven hundred and forty six, average household income almost one hundred and twenty thousand dollars, and as far as Gen X millennials and Gen Z that represents nearly seventy percent of our new purchasers. So it's really appealing to well,
let me flip it around. We're less exposed to that lower and consumer that you were just speaking to, and we're showing that the hiring consumer that seven forty six FICO traveler is continuing to go on vacant and we're benefiting from it. Our forward look is showing our bookings to be super consistent for the next three months, as well as our portfolio loans of people who do use finance to purchase their timeshare. There's really been no deterioration in the portfolio that we have, Mike.
In the commercial break, Matt and I were taking a look at the MODL screen on the Bloomberg terminal, taking a look at the different segment revenues for travel and leisure, and you can see the vacation ownership, like Matt talked about, it's been steadily growing over the past several quarters. But then I take a look at corporate has been declining. It looks like for several periods in a row here, and I wonder how you're approaching that part of the business.
Are you deemphasizing this or is there a plan to turn corporate around.
Well, we basically have two primary segments and the core of our business. Seventy percent of our EBITA comes from our vacation ownership segment we've launched. Over the past three years, we've rebranded the company from Windom Destinations to Travel Leisure because we want to pursue a multi brand strategy. With that strategy, we've been able to acquire a core vacation club,
a world class hospitality brand. We've been able to accelerate Margaritaville, and we'll be launching later this year Sports Illustrated Resorts, so we will be we will be emphasizing that segment of the business. The corporate which is which depending on terminology, is really a portion of our business, the smaller one that has structural headwinds that we think will become less
a portion of our business going forward. But despite those headwinds, we've been able to meet our second quarter targets of two hundred and fifty million of view and reafform reaffirm our full year guidance. So we think we'll see more emphasis on the vospace and less emphasize us on the rest of the business going forward. But we think that strategy will lead to mid single digit growth and incredible return of cash to our shareholders, which is about fifty percent free cash flow to Ebita.
Much has been made of a ten percent drop eleven percent drop in the US dollar from its hives. Mike, does this affect you? How do you look at this? Are are you know, Europeans with more money able to come over and spend more? Are Are are you having uh? You know, are are you having to pay a little bit more when you buy foreign destinations? What's what's what's the mean to you?
Yeah? You know, all the macro news, whether it's currency inflation, tariffs, none of that has really impacted US. And it's for some simple reasons. Percent of our US consumer ninety percent of our consumers are US domisi child, which means all of our risk is inside the US, which has great regulation, it has great affinity toward brands like ours. So the international travel, the weakness of the dollar, it might affect us positively for European travel to the US, but it's
really on the margin. It won't affect our full year results. It simply may modestly change our mix because of our acquisitions. For instance, a core vacation club is primarily in Asia. All of that cash recycles within the region and it doesn't create an incremental risk to US. And again, ten percent of our business is international, So what we're really watching for is how the US economy and how the
US consumer is holding up. And as we saw in Q three, as we're already seeing, sorry, as we saw in Q two, and as we're already seeing in Q three, that consumer and the US economy from our perspective, is holding up extremely well.
All Right, that's a good place to leave it. Mike, always great to speak with you. That is Mike Brown. He is the CEO of Travel and Leisure