00:00Michael Brown, fresh off of that earnings report earlier this morning and fresh off a record close
00:04of the stock. You know, we were joking a little bit earlier on this program, Michael, as to whether
00:08people were continuing to spend on travel, at least based on the properties that you oversee,
00:13that does appear to be the case. What's going on? Well, that's right. We saw solid demand the third,
00:20the first three quarters of 2025, and that just continued, if not accelerated in Q4.
00:25What I'm happy to say is we've gotten ourselves halfway through Q1. That momentum and leisure
00:31travel continues. We're not seeing that abate whatsoever. And I know there's a lot of conversation
00:37around the K-shaped economy, but our consumer average household income well above 100,000 and
00:43FICUS above 740 sits at the top half of that. And they're continuing to travel. And we're not only
00:50seeing it in Q1, but we're seeing it in forward bookings heading into Q2.
00:53How sticky are your customers, Michael? I mean, let's just, I mean, hypothetically,
00:58if there was some sort of economic softness here, do those folks, do they stay, do they stick around?
01:04Well, I think two economic realities have proven the stickiness of our consumer to be above what
01:11you would see in general leisure travel. First of all, in an economic downturn, 80% of our consumers
01:17have fully paid for their ownership. So the financial advantage of staying at home doesn't
01:23really help them because they've already paid for their ownership. So what's the disadvantage of going
01:30on vacation? You might see a change of trend to a drive-to versus a fly-to. And that's one
01:36clear
01:37advantage of why our consumers are sticky. The second is with 80% having fully purchased their ownership,
01:43when you have four straight years of mid-single digits on average inflation, the price you paid
01:51in 2015 or 18 is screaming value. So when you come back and you see the value you've already
01:57realized from your ownership, it's a lot easier to justify buying more with us.
02:02I want to talk a little bit about demographics here and how you expand your client base, because
02:08the word timeshare, you tend to think of sort of an older traveler, but we know that, you know,
02:14millennial, Gen Z, that sort of segment of the population, it seems like every industry is trying
02:20to seize upon that. So I'm wondering what that means for travel and leisure, you know, how you're
02:25thinking about that segment.
02:28Really, we are really doing it as an industry and as an individual company in two different aspects.
02:33In 2008, I know that's going way back, this industry fundamentally changed. Now, 85% of all sales done
02:42today are done by hospitality companies that recognize that all demographics are super important
02:49for the long-term growth of the industry and for our individual companies. But for us specifically,
02:56what we've begun coming out of COVID is we've repositioned the company to be more niche and to
03:04really fit individual cohorts by launching new brands on names that you would recognize that really
03:10match leisure travel to lifestyle. Sports Illustrated for the sports enthusiast, Eddie Bauer for the
03:17outdoor enthusiast and Margaritaville. We've really reinvigorated for those that love that
03:23Margaritaville, Margarita on a Beach. We listen to some great music. Everyone has their own form of
03:30travel. We're just now matching a lifestyle that fits their individual needs with the launch of new
03:38brands. And those new brands are really proven to be successful in how we grow our business.
03:43Yeah, I have to say that does not sound so bad right now as we sit in a slightly less
03:49frigid New York
03:49City. But talk to us a little bit about, you know, the portfolio of brands that you're working
03:54with now. You just listed quite a few of them. I mean, are you happy with that makeup? Are you
03:59looking
03:59for, you know, more additions come 2026 as we get deeper into it?
04:04New additions, yes, for sure. But let me just step back as to the philosophy of the company.
04:10We're all about incrementally growing through strong execution and providing to the street a lot of
04:15consistency and reliability in our performance. And that doesn't happen if you take your eye off the
04:21ball. We've been very methodical in adding a core. Then we added Sports Illustrated. And then we added
04:28Eddie Bauer, proving each time that we can execute against the brands we've become stewards of, and
04:35then adding brands on top of it. There's plenty of white space out there for us to add incremental
04:40lifestyle brands or in a different demographic chain scale. And we will, and we will do it maybe
04:47later this year, early next. But first and foremost, we want to be great brand stewards and execute
04:54against our business plan and return to shareholders what we've promised them. And you don't do that by
04:59taking on too much at one time. And I think we're starting to prove to the market that we know
05:04how to
05:05take on new brands, be stewards and then execute. And then ultimately move to our next brand that
05:11we'll bring on. Michael, I do want to just talk about the potential uptake of new customers, you
05:16know, folks that are now in that TNL ecosystem. There's been a lot of talk. I mean, when we talk
05:20about economic conditions, there's been some talk about tax refund season, you know, whatever potential
05:26benefits might accrue coming out of that budget bill from last year. Have you actually looked at that
05:32as an opportunity? Are you actively targeting those potential people who might potentially
05:37see some minor windfall of money to spend? It definitely helps. But I could point to about
05:46six or eight economic factors that ultimately support the consumer confidence index. And when that
05:54when that index is going up and to the right, that's good for business. And it encourages
06:00more leisure travel and more spending when you're on leisure travel. So I think tax refund is
06:06supportive. No question. We'll see where interest rates go. General macroeconomic conditions
06:13are very supportive. And obviously, you know, we've seen the Dow move up above 50,000 a few times and
06:20teeter back and forth on both sides of it. Yeah. That general feeling of good economic conditions,
06:25especially in April when tax returns come, give people a lot more confidence to travel into the
06:31summer season with the World Cup coming, celebrating America's 250th birthday. Right. Lots of reasons
06:38to book at our resorts.
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