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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________
FORM 10-Q
____________________________________________
(Mark One)
x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
or
o    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_________ to ________
Commission file number 001-37794
____________________________________________
Hilton Grand Vacations Inc.
(Exact Name of Registrant as Specified in Its Charter)
____________________________________________
Delaware81-2545345
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
6355 MetroWest Boulevard, Suite 180,
Orlando, Florida
32835
(Address of Principal Executive Offices)(Zip Code)
Registrant’s Telephone Number, Including Area Code (407) 613-3100
(Former Name, Former Address, and Former Fiscal Year, if Changed Since Last Report)
____________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareHGVNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerxAccelerated Filero
Non-Accelerated FileroSmaller Reporting Companyo
Emerging Growth Companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No
The number of shares outstanding of the registrant’s common stock, par value $0.01 per share, as of August 4, 2022 was 117,692,987.


HILTON GRAND VACATIONS INC.
FORM 10-Q TABLE OF CONTENTS


PART I FINANCIAL INFORMATION
Item 1.    Financial Statements
HILTON GRAND VACATIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
June 30,
2022
December 31,
2021
(unaudited)
ASSETS
Cash and cash equivalents$374 $432 
Restricted cash292 263 
Accounts receivable, net of allowance for doubtful accounts of $48 and $39
413 302 
Timeshare financing receivables, net1,689 1,747 
Inventory1,241 1,240 
Property and equipment, net801 756 
Operating lease right-of-use assets, net60 70 
Investments in unconsolidated affiliates66 59 
Goodwill1,357 1,377 
Intangible assets, net1,358 1,441 
Land and infrastructure held for sale 41 
Other assets481 280 
TOTAL ASSETS (variable interest entities - $915 and $1,100)
$8,132 $8,008 
LIABILITIES AND EQUITY  
Accounts payable, accrued expenses and other$976 $673 
Advanced deposits130 112 
Debt, net2,787 2,913 
Non-recourse debt, net1,024 1,328 
Operating lease liabilities80 87 
Deferred revenues360 237 
Deferred income tax liabilities698 670 
Total liabilities (variable interest entities - $811 and $1,199)
6,055 6,020 
Commitments and contingencies - see Note 21  
Equity:  
Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of June 30, 2022 and December 31, 2021
  
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 118,501,896 shares issued and outstanding as of June 30, 2022 and 119,904,001 shares issued and outstanding as of December 31, 2021
1 1 
Additional paid-in capital1,626 1,630 
Accumulated retained earnings424 357 
Accumulated other comprehensive income26  
Total equity2,077 1,988 
TOTAL LIABILITIES AND EQUITY$8,132 $8,008 
See notes to unaudited condensed consolidated financial statements.
1

HILTON GRAND VACATIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share amounts)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Revenues
Sales of VOIs, net$361 $76 $630 $109 
Sales, marketing, brand and other fees161 81 280 134 
Financing64 37 128 74 
Resort and club management124 48 249 93 
Rental and ancillary services171 54 307 86 
Cost reimbursements67 38 133 73 
Total revenues948 334 1,727 569 
Expenses
Cost of VOI sales65 21 105 24 
Sales and marketing284 116 527 198 
Financing22 11 41 24 
Resort and club management37 11 73 19 
Rental and ancillary services150 36 282 67 
General and administrative66 30 108 51 
Acquisition and integration-related expense17 14 30 29 
Depreciation and amortization64 12 124 23 
License fee expense32 19 57 33 
Impairment (reversal) expense(3)  1 
Cost reimbursements67 38 133 73 
Total operating expenses801 308 1,480 542 
Interest expense(35)(17)(68)(32)
Equity in earnings from unconsolidated affiliates4 4 7 6 
Other loss, net(2)(1)(1)(2)
Income (loss) before income taxes114 12 185 (1)
Income tax (expense) benefit(41)(3)(61)3 
Net income$73 $9 $124 $2 
Earnings per share:
Basic$0.60 $0.10 $1.03 $0.02 
Diluted$0.60 $0.10 $1.01 $0.02 
See notes to unaudited condensed consolidated financial statements.
2

HILTON GRAND VACATIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(in millions)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net income$73 $9 $124 $2 
Derivative instrument adjustments, net of tax10  32  
Foreign currency translation adjustments(6) (6) 
Other comprehensive income, net of tax4  26  
Comprehensive income$77 $9 $150 $2 
See notes to unaudited condensed consolidated financial statements.
3

HILTON GRAND VACATIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
Six Months Ended June 30,
20222021
Operating Activities
Net income$124 $2 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization124 23 
Amortization of deferred financing costs, acquisition premiums and other25 10 
Provision for financing receivables losses71 28 
Impairment expense 1 
Other loss, net2 2 
Share-based compensation26 18 
Deferred income tax expense 9 
Equity in earnings from unconsolidated affiliates(7)(6)
Net changes in assets and liabilities:
Accounts receivable, net(73)(101)
Timeshare financing receivables, net(52)18 
Inventory20 (29)
Purchases and development of real estate for future conversion to inventory(1)(17)
Other assets(159)(35)
Accounts payable, accrued expenses and other290 59 
Advanced deposits17  
Deferred revenues123 110 
Net cash provided by operating activities530 92 
Investing Activities
Capital expenditures for property and equipment(19)(4)
Software capitalization costs(16)(9)
Net cash used in investing activities(35)(13)
Financing Activities
Issuance of debt 1,350 
Issuance of non-recourse debt402  
Repayment of debt(132)(55)
Repayment of non-recourse debt(697)(118)
Debt issuance costs and discounts(7)(3)
Repurchase and retirement of common stock(78) 
Payment of withholding taxes on vesting of restricted stock units(8)(5)
Proceeds from employee stock plan purchases2 1 
Proceeds from stock option exercises1 6 
Other financing activity(1)(1)
Net cash (used in) provided by financing activities(518)1,175 
Effect of changes in exchange rates on cash, cash equivalents & restricted cash(6) 
Net (decrease) increase in cash, cash equivalents and restricted cash(29)1,254 
Cash, cash equivalents and restricted cash, beginning of period695 526 
Cash, cash equivalents and restricted cash, end of period$666 $1,780 
See notes to unaudited condensed consolidated financial statements.
4


HILTON GRAND VACATIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)
(in millions)
Common StockAdditional
Paid-in
Capital
Accumulated
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Total
Equity
SharesAmount
Balance as of December 31, 2021120 $1 $1,630 $357 $ $1,988 
Net income— — — 51 — 51 
Activity related to share-based compensation— — 4 — — 4 
Derivative instrument adjustments, net of tax— — — — 22 22 
Balance as of March 31, 2022120 $1 $1,634 $408 $22 $2,065 
Net income— — — 73 — 73 
Activity related to share-based compensation— — 16 — — 16 
Foreign currency translation adjustments— — — — (6)(6)
Derivative instrument adjustments, net of tax— — — — 10 10 
Employee stock plan issuance— — 2 — — 2 
Repurchase and retirement of common stock(2)— (26)(57)— (83)
Balance as of June 30, 2022118 $1 $1,626 $424 $26 $2,077 
Common StockAdditional
Paid-in
Capital
Accumulated
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Total
Equity
SharesAmount
Balance as of December 31, 202084 $1 $192 $181 $— $374 
Net loss— — — (7)— (7)
Activity related to share-based compensation— — 2 — — 2 
Balance as of March 31, 202184 $1 $194 $174 $— $369 
Net income— — — 9 — 9 
Activity related to share-based compensation1 — 18 — — 18 
Balance as of June 30, 202185 $1 $212 $183 $— $396 
See notes to unaudited condensed consolidated financial statements.
5

HILTON GRAND VACATIONS INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Organization and Basis of Presentation
Our Business
Hilton Grand Vacations Inc. (“Hilton Grand Vacations,” “we,” “us,” “our,” “HGV” or the “Company”) is a global timeshare company engaged in developing, marketing, selling and managing timeshare resorts, primarily under the Hilton Grand Vacations brand. During 2021, we acquired Dakota Holdings, Inc., the parent of Diamond Resorts International (the "Diamond Acquisition"), and are in the process of rebranding Diamond properties and sales centers to brands that meet Hilton standards. Our operations primarily consist of selling vacation ownership intervals and vacation ownership interests (collectively, “VOIs” or “VOI”) for ourselves and third parties; financing and servicing loans provided to consumers for their VOI purchases; operating resorts and multi-resort trusts; and managing our points-based Hilton Grand Vacations Club and Hilton Club exchange program (collectively the “Legacy-HGV Club”) in addition to our Diamond points-based clubs (the Legacy-HGV Club and Diamond Clubs (as defined below) are collectively referred to as “Clubs”).
As of June 30, 2022, we had 154 properties located in the United States (“U.S.”), Europe, Mexico, the Caribbean, Canada and Japan. A significant number of our properties and VOIs are concentrated in Florida, Nevada, Hawaii, Europe, California, Virginia and Arizona.
Diamond Acquisition
On August 2, 2021, we completed the Diamond Acquisition by exchanging 100 percent of the outstanding equity interests of Diamond for shares of HGV common stock. Pre-existing HGV shareholders owned approximately 72 percent of the combined company immediately after giving effect of the Diamond Acquisition, with certain funds controlled by Apollo Global Management Inc. (the "Apollo Funds" or, "Apollo") and other minority shareholders, who previously owned 100 percent of Diamond, holding the remaining, approximately 28 percent at the time the Diamond Acquisition was completed.
Diamond also operates in the hospitality and VOI industry, with a worldwide resort network of global vacation destinations. Diamond’s portfolio consists of resort properties that we manage, are included in one of Diamond's single- and multi-use trusts (collectively, the "Diamond Collections" or "Collections"), or are Diamond branded resorts in which we own inventory, as well as affiliated resorts and hotels, which we do not manage, and which do not carry the Diamond brand but are a part of Diamond's network and, through THE Club® and other Club offerings (the “Diamond Clubs”), are available for its members to use as vacation destinations.
The unaudited condensed consolidated financial statements in this report include Diamond’s results of operations beginning on August 2, 2021. We refer to Diamond's business and operations that we acquired as "Legacy-Diamond", and our business and operations that existed both prior to and following the Diamond Acquisition as "Legacy-HGV." See Note 3: Diamond Acquisition for more information.
Basis of Presentation
The unaudited condensed consolidated financial statements presented herein include 100 percent of our assets, liabilities, revenues, expenses and cash flows as well as all entities in which we have a controlling financial interest. Our accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods. All material intercompany transactions and balances have been eliminated in consolidation.
The unaudited condensed consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Although we believe the disclosures made are adequate to prevent information presented from being misleading, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2021, included in our Annual Report on Form 10-K filed with the SEC on March 1, 2022.
6

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, ultimate results could differ from those estimates. Interim results are not necessarily indicative of full year performance.
The determination of a controlling financial interest is based upon the terms of the governing agreements of the respective entities, including the evaluation of rights held by other interests. If the entity is considered to be a variable interest entity (“VIE”), we determine whether we are the primary beneficiary, and then consolidate those VIEs for which we have determined we are the primary beneficiary. If the entity in which we hold an interest does not meet the definition of a VIE, we evaluate whether we have a controlling financial interest through our voting interests in the entity. We consolidate entities when we own more than 50 percent of the voting shares of a company or otherwise have a controlling financial interest. The consolidated financial statements reflect our financial position, results of operations and cash flows as prepared in conformity with U.S. GAAP.
Note 2: Summary of Significant Accounting Policies
Reclassifications
Certain prior period amounts in the unaudited condensed consolidated financial statements have been reclassified to conform to the current period presentation with no effect on previously reported total assets and total liabilities, net income or stockholders’ equity.
Recently Issued Accounting Pronouncements
Accounting Standards Not Yet Adopted
In March 2022, the FASB issued Accounting Standards Update 2022-02 (“ASU 2022-02”), Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 provides, under Issue 2 - Vintage Disclosures, that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases. For financing receivables, the vintage disclosure is to present the amortized cost basis by credit quality indicator and class of financing receivable for the year of origination. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and is to be applied prospectively. We are currently evaluating the effects of this ASU to our disclosures.
Note 3: Diamond Acquisition
On August 2, 2021, (the “Acquisition Date”), we completed the Diamond Acquisition by exchanging 100 percent of the outstanding equity interests of Diamond to HGV common shares. Following the closing of the Diamond Acquisition, pre-existing HGV shareholders owned approximately 72 percent of the combined company after giving effect to the Diamond Acquisition, with Apollo Funds and other minority shareholders holding the remaining approximately 28 percent at the time the Diamond Acquisition was completed. Diamond is a leader in the vacation ownership industry focused on the infusion of hospitality and experiences through the full life cycle of an owner or members' life cycle relationship with Diamond. This strategic combination creates a more expansive industry offering, leveraging HGV's strong brand and net owner growth along with Diamond's diverse network of locations and strength in experiential offerings. The acquisition also diversifies our product offerings and allows us to expand our customer demographic.
On the Acquisition Date, shareholders of Diamond received 0.32 shares of our common stock for each share of Diamond common stock, totaling approximately 28 percent of our total common shares outstanding. Additionally, in connection with the Diamond Acquisition, HGV repaid certain existing indebtedness of Diamond.
7

The following table presents the fair value of each class of consideration transferred in relation to the Diamond Acquisition at the Acquisition Date:
($ in millions, except stock price amounts)
HGV common stock shares issued for outstanding Diamond shares33.93 
HGV common stock price as of Acquisition Date(1)
40.71 
Stock purchase price$1,381 
 
Repayment of Legacy-Diamond debt$2,029 
Total consideration transferred$3,410 
(1) Represents the average of the opening and closing price of HGV stock on August 2, 2021.
Preliminary Fair Values of Assets Acquired and Liabilities Assumed
We accounted for the Diamond Acquisition as a business combination, which requires us to record the assets acquired and liabilities assumed at fair value as of the Acquisition Date. The preliminary fair values of the assets acquired and liabilities assumed, which are presented in the table below, and the related preliminary acquisition accounting are based on management’s estimates and assumptions, as well as information compiled by management, including the books and records of Diamond. Our estimates and assumptions are subject to change during the measurement period, not to exceed one year from the Acquisition Date. The magnitude of the Diamond Acquisition could necessitated the need to use the full one-year measurement period to adequately analyze and assess a number of the factors used in establishing the asset and liability fair values as of the Acquisition Date. The final values may also result in changes to amortization expense related to intangible assets and depreciation expense related to property and equipment, among other changes. Any potential adjustments made could be material in relation to the values presented in the table below.
As of June 30, 2022, the primary areas of the purchase price allocation that are not yet finalized include the following: (1) finalizing the review and valuation of acquired undeveloped land, property and equipment (including key assumptions, inputs and estimates) and assigning the remaining useful lives to the depreciable assets; (2) finalizing the review of accounts receivable, including the evaluation of which receivables are purchased credit deteriorated assets; (3)
8

finalizing the review and valuation of other acquired assets and assumed liabilities; and (4) finalizing our estimate of the impact of purchase accounting on deferred income tax liabilities.
($ in millions)Preliminary Amounts Recognized as of the Acquisition Date
Assets acquired
Cash and cash equivalents$310 
Restricted cash127 
Accounts receivable, net of allowance for doubtful accounts97 
Timeshare financing receivables, net825 
Inventory497 
Property and equipment, net298 
Operating lease right-of-use assets, net32 
Intangible assets, net1,429 
Other assets250 
Total assets acquired$3,865 
Liabilities assumed
Accounts payable, accrued expenses and other$485 
Non-recourse debt, net660 
Operating lease liabilities34 
Advanced deposits4 
Deferred revenues140 
Deferred income tax liabilities489 
Total liabilities assumed$1,812 
Net assets acquired$2,053 
Total consideration transferred$3,410 
Goodwill(1)
$1,357 
(1)Goodwill is calculated as total consideration transferred less net assets acquired and it primarily represents the value that we expect to obtain from synergies and growth opportunities from our combined Company post-acquisition. The majority of goodwill is not expected to be deductible for tax purposes.
The measurement period adjustments recorded during the quarter ended June 30, 2022 resulted from changes to our estimates of the fair value of the acquired assets and assumed liabilities based on finalizing the valuations of operating lease right-of-use asset and related lease liabilities valuation and capitalized software. These resulted in a net adjustment to goodwill for the period of $6 million, net of tax impacts of adjustments. The measurement period adjustments recorded during the quarter ended March 31, 2022 resulted from changes to our estimates of the fair value of the acquired assets and assumed liabilities based on a revision to our valuation of insurance receivables given the ultimate determination of proceeds related to preacquisition business interruption insurance claims. The measurement period adjustments recognized include an adjustment to increase accounts receivable, net of allowance for doubtful accounts, for pre-acquisition contingencies, and the related tax impacts increasing deferred income tax liabilities. These resulted in a net adjustment to goodwill for the period of $26 million. The prior period net income effect associated with the measurement period adjustments recorded during the six months ended June 30, 2022 is immaterial.
Timeshare Financing Receivables
We acquired timeshare financing receivables which consist of loans to customers who purchased vacation ownership products and chose to finance their purchases. These timeshare financing receivables are collateralized by the underlying VOIs and generally have 10-year amortizing repayment terms. We estimated the fair value of the timeshare
9

financing receivables using a discounted cash flow model, which calculated a present value of expected future risk-adjusted cash flows over the remaining term of the respective timeshare financing receivables. We do not expect any material changes to the provisional estimates.
For purposes of our allocation, we have considered all acquired receivables to be purchase credit deteriorated assets. See Note 7: Timeshare Financing Receivables for additional information.
Acquired timeshare financing receivables with credit deterioration as of the Acquisition Date were as follows:
($ in millions)As of August 2, 2021
Purchase price$825 
Allowance for credit losses512 
Premium attributable to other factors(97)
Par value$1,240 
Inventory
We acquired inventory which primarily consists of completed unsold VOIs and undeveloped land. We preliminarily estimated the value of acquired inventory using a discounted cash flows method, which included an estimate of cash flows expected to be generated from the sale of VOIs. Significant estimates and assumptions impacting the fair value of the acquired inventory that are subjective and/or require complex judgments include our estimates of operating costs and margins, and the discount rate. Certain other estimates and assumptions impacting the fair value of the acquired inventory involving less subjective and/or less complex judgments include: short-term and long-term revenue growth rates, capital expenditures, tax rates and other factors impacting the discounted cash flows. We do not expect any material changes to the provisional estimates for completed and unsold VOIs.
Property and Equipment
We acquired property and equipment, which includes land, building and leasehold improvements, furniture and fixtures and construction in progress. We preliminarily estimated the value of the majority of property and equipment using a mix of cost, market and discounted cash flow approaches, which included estimates of future income growth, capitalization rates, discount rates, and capital expenditure needs of the resorts. Certain property and equipment assets were preliminarily valued at carrying value, which is our best estimate of fair value at this time given the information available to us. As of June 30, 2022, we are continuing to assess the market assumptions and property conditions, which could result in changes to these preliminary values.
Goodwill
We recognized goodwill of approximately $1.4 billion in connection with the Diamond Acquisition. We have allocated the acquired goodwill to our segments, Real Estate Sales and Financing and Resort Operations and Club Management, as indicated in the table below. Our allocations may change throughout the measurement period as we continue to finalize the fair value of assets acquired and liabilities assumed in the Diamond Acquisition.
Real Estate Sales and Financing SegmentResort Operations and Club Management SegmentTotal Consolidated
Goodwill$1,001 $356 $1,357 
10

Intangible Assets
The following table presents our preliminary estimates of the fair values of the acquired Diamond’s identified intangible assets and their related estimated remaining useful lives:
Estimated Fair Value
($ in millions)
Estimated
Useful Life
(in years)
Trade name$18 1.5
Management contracts1,251 35.4
Club member relationships139 14.4
Computer software21 1.5
Total intangible assets$1,429 
We estimated the fair value of Diamond’s trade name using the relief-from-royalty method, which applies an estimated royalty rate to forecasted future cash flows, discounted to present value. We estimated the value of management contracts and member relationships using the multi-period excess earnings method, which is a variation of the income approach. This method estimates an intangible asset’s value based on the present value of the incremental after-tax cash flows attributable to the intangible asset. Significant estimates and assumptions impacting the fair value of the acquired management contracts intangible that are subjective and/or require complex judgments include our estimates of operating costs and margins, and the discount rate. Certain other estimates and assumptions impacting the fair value of the acquired management contracts intangible involving less subjective and/or less complex judgments include: short-term and long-term revenue growth rates, attrition rates, capital expenditures, tax rates and other factors impacting the discounted cash flows. We do not expect any material changes to the provisional estimates for trade names, management contracts, and club member relationships, other than as a result of working capital adjustments.
Deferred Revenue
Deferred revenue primarily relates to deferred sales incentives revenues, primarily related to Bonus Points, which are deferred and recognized upon redemption; and Club membership fees, which are deferred and recognized over the terms of the applicable contract term or membership on a straight-line basis. Additionally, deferred revenue includes maintenance fees collected from owners, in certain cases, which are earned by the relevant property owners' association over the applicable period. We preliminarily estimated the fair value of the deferred revenue at the carrying value of such liabilities as of the Acquisition Date. We do not expect any material changes to the provisional estimates.
Deferred Income Taxes
Deferred income taxes primarily relate to the fair value of assets and liabilities acquired from Diamond, including timeshare financing receivables, inventory, property and equipment, intangible assets, and debt. We preliminarily estimated deferred income taxes based on statutory rates in the jurisdictions of the legal entities where the acquired assets and liabilities are recorded. We are continuing to assess the tax rates used, and we will update our estimate of deferred income taxes based on changes to our preliminary valuations of the related assets and liabilities and refinement of the effective tax rates, which could result in changes to these preliminary values.
Debt
As part of the acquisition and consideration transferred, we paid off $2,029 million of Diamond’s existing corporate debt, accrued interest and early termination penalties.
Non-Recourse Debt
We estimated the fair value of the securitized debt from VIEs and warehouse loan facilities, using a discounted cash flow model under the income approach. The significant assumptions in our analysis include default rates, prepayment rates, bond interest rates and other structural factors. We do not expect any material changes to the provisional estimates.
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Lease Obligations
We have recorded liabilities for those operating leases assumed in connection with the Diamond Acquisition with a remaining term in excess of a year. We measured the lease liabilities assumed at the present value of the remaining contractual lease payments based on the guidance in ASC 842 and using a discount rate determined as of the Acquisition Date. The right-of-use assets for such leases were measured at an amount equal to the lease liabilities, adjusted for favorable or unfavorable terms of the lease when compared with market terms. We do not expect any material changes to the provisional estimates.
Pro Forma Results of Operations
The following unaudited pro forma information presents the combined results of operations of HGV and Diamond as if we had completed the Diamond Acquisition on January 1, 2021, the first day of our prior fiscal year, but using our preliminary fair values of assets and liabilities as of the Acquisition Date. These unaudited pro forma results do not reflect any synergies from operating efficiencies. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Diamond Acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations.
($ in millions, except per share data)Six Months Ended
June 30, 2021
Revenue$1,155 
Net loss(87)
Note 4: Revenue from Contracts with Customers
Disaggregation of Revenue
The following tables show our disaggregated revenues by product and segment from contracts with customers. We operate our business in the following two segments: (i) Real estate sales and financing and (ii) Resort operations and club management. Please refer to Note 20: Business Segments below for more details related to our segments.
($ in millions)Three Months Ended June 30,Six Months Ended June 30,
Real Estate Sales and Financing Segment2022202120222021
Sales of VOIs, net$361 $76 $630 $109 
Sales, marketing, brand and other fees161 81 280 134 
Interest income54 31 109 62 
Other financing revenue10 6 19 12 
Real estate sales and financing segment revenues$586 $194 $1,038 $317 
($ in millions)Three Months Ended June 30,Six Months Ended June 30,
Resort Operations and Club Management Segment2022202120222021
Club management$51 $29 $102 $56 
Resort management73 19 147 37 
Rental(1)
155 50 279 80 
Ancillary services16 4 28 6 
Resort operations and club management segment revenues$295 $102 $556 $179 
(1)Excludes intersegment eliminations. See Note 20: Business Segments for additional information.
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Contract Balances
The following table provides information on our accounts receivable from contracts with customers which are included in Accounts receivable, net on our unaudited condensed consolidated balance sheets:
($ in millions)June 30,
2022
December 31,
2021
Receivables$273 $202 
The following table presents the composition of our contract liabilities:
($ in millions)June 30,
2022
December 31,
2021
Contract liabilities:
Advanced deposits$130 $112 
Deferred sales of VOIs of projects under construction87 34 
Club dues and Legacy-HGV Club activation fees131 91 
Bonus Point incentive liability(1)
53 44 
(1)Amounts related to the Bonus Point incentive liability are included in Accounts payable, accrued expenses and other on our unaudited condensed consolidated balance sheets. This liability is comprised of unrecognized revenue for incentives from VOI sales and sales and marketing expenses in conjunction with our fee-for-service arrangements.
Revenue earned for three and six months ended June 30, 2022 that was included in the contract liabilities balance at December 31, 2021 was approximately $54 million and $98 million, respectively.
Our accounts receivables that relate to our contracts with customers includes amounts associated with our contractual right to consideration for completed performance obligations related primarily to our fee-for-service arrangements and homeowners’ associations management agreements and are settled when the related cash is received. Accounts receivable are recorded when the right to consideration becomes unconditional and is only contingent on the passage of time. Refer to Note 7: Timeshare Financing Receivables for information on balances and changes in balances during the period related to our timeshare financing receivables.
Contract assets relate to incentive fees that can be earned for meeting certain targets on sales of VOIs at properties under our fee-for-service arrangements; however, our right to consideration is conditional upon completing the requirements of the annual incentive fee period. There were no contract assets as of June 30, 2022 and December 31, 2021, respectively.
Contract liabilities include payments received or due in advance of satisfying our performance obligations. Such contract liabilities include advance deposits received on prepaid vacation packages for future stays at our resorts, deferred revenues related to sales of VOIs of projects under construction, Club activation fees and annual dues and the liability for Bonus Points awarded to our customers for purchase of VOIs at our properties or properties under our fee-for-service arrangements that may be redeemed in the future.
In addition to the contract liabilities included herein, we also have deferred revenue of $142 million and $112 million as of June 30, 2022 and December 31, 2021, respectively. This additional deferred revenue balance includes $44 million and $51 million for bonus points and vacation package deferred revenue, $33 million and $10 million in deferred property insurance, $27 million and $14 million in deferred maintenance fees and $38 million and $37 million in other deferred revenue as of June 30, 2022 and December 31, 2021, respectively.
Transaction Price Allocated to Remaining Performance Obligations
Transaction price allocated to remaining performance obligations represents contract revenue that has not yet been recognized. Our contracts with remaining performance obligations primarily include (i) sales of VOIs under construction, (ii) Legacy-HGV Club activation fees paid at closing of a VOI purchase, (iii) customers’ advanced deposits on prepaid vacation packages and (iv) Bonus Points that may be redeemed in the future.
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The following table represents the deferred revenue, cost of VOI sales and direct selling costs from sales of VOIs related to projects under construction as of June 30, 2022 and December 31, 2021:
($ in millions)June 30,
2022
December 31,
2021
Sales of VOIs, net$87 $34 
Cost of VOI sales(1)
30 12 
Sales and marketing expense13 5 
(1)Includes anticipated Cost of VOI sales related to inventory associated with Sales of VOIs under construction.
We expect to recognize the revenue, costs of VOI sales and direct selling costs related to the projects under construction as of June 30, 2022 upon their completion in 2022.
The following table includes the remaining transaction price related to Advanced deposits, and Legacy-HGV Club activation fees and Bonus Points as of June 30, 2022:
($ in millions)Remaining
Transaction Price
Recognition PeriodRecognition Method
Advanced deposits$130 18 monthsUpon customer stays
Legacy-HGV Club activation fees64 7 yearsStraight-line basis over average inventory holding period
Bonus Points53 
18 - 30 months
Upon redemption
Note 5: Restricted Cash
Restricted cash was as follows:
($ in millions)June 30,
2022
December 31,
2021
Escrow deposits on VOI sales$186 $152 
Reserves related to non-recourse debt(1)
63 67 
Other(2)
43 44 
$292 $263 
(1)See Note 13: Debt & Non-recourse Debt for further discussion.
(2)Other restricted cash primarily includes cash collected on behalf of HOAs, deposits related to servicer arrangements and other deposits.
Note 6: Accounts Receivable
Accounts receivable within the scope of ASC 326 are measured at amortized cost. The following table represents our accounts receivable, net of allowance for credit losses:
($ in millions)June 30,
2022
December 31,
2021
Fee-for-service commissions$92 $73 
Real estate and financing55 51 
Resort and club operations117 76 
Tax receivables54 95 
Insurance claims receivable80  
Other receivables(1)
15 7 
Total$413 $302 
(1)Primarily includes individually insignificant allowances recognized in the ordinary course of business.
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Our accounts receivable are generally due within one year of origination. We use delinquency status and economic factors such as credit quality indicators to monitor our receivables within the scope of ASC 326 and use these as a basis for how we develop our expected loss estimates.
We sell VOIs on behalf of third-party developers using the Hilton Grand Vacations brand in exchange for sales, marketing and brand fees. We use historical losses and economic factors as a basis to develop our allowance for credit losses. Under these fee-for-service arrangements, we earn commission fees based on a percentage of total interval sales. Additionally, the terms of these arrangements include provisions requiring the reduction of fees earned for defaults and cancellations.
The changes in our allowance for fee-for-service commissions were as follows during the period from December 31, 2021 to June 30, 2022:
($ in millions)
Balance as of December 31, 2021$18 
Current period provision for expected credit losses5 
Write-offs charged against the allowance(9)
Balance at June 30, 2022$14 
In addition to the fee-for-service commission allowance, we have various allowances for our accounts receivable to account for expected losses related to club dues, maintenance fees, trade accounts receivable, sales of VOIs, and marketing packages.

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Note 7: Timeshare Financing Receivables
We define our timeshare financing receivables portfolio segments as (i) originated and (ii) acquired. The following table presents the components of each portfolio segment by class of timeshare financing receivables:
 
Originated(2)
Acquired(2)
($ in millions)June 30,
2022
December 31,
2021
June 30,
2022
December 31,
2021
Securitized$649 $587 $419 $523 
Unsecuritized(1)
884 810 436 515 
Timeshare financing receivables, gross$1,533 $1,397 $855 $1,038 
Unamortized non-credit acquisition premium(3)
  54 74 
Less: allowance for financing receivables losses(348)(280)(405)(482)
Timeshare financing receivables, net$1,185 $1,117 $504 $630 
(1)Includes amounts used as collateral to secure a non-recourse revolving timeshare receivable credit facility ("Timeshare Facility") as well as amounts held as future collateral for securitization activities.
(2)Acquired timeshare financing receivables include all timeshare financing receivables of Legacy-Diamond as of the Acquisition Date. Originated timeshare financing receivables include all Legacy-HGV timeshare financing receivables and Legacy-Diamond timeshare financing receivables originated after the Acquisition Date.
(3)Non-credit premium of $97 million was recognized at the Acquisition Date, of which $54 million remains unamortized as of June 30, 2022.
In April 2022, we completed a securitization of $246 million of gross timeshare financing receivables and issued approximately $107 million of 3.61 percent notes, $84 million of