Vacation ownership company Marriott Vacations (NYSE: VAC) fell short of the market’s revenue expectations in Q1 CY2025, with sales flat year on year at $1.2 billion. Its non-GAAP profit of $1.66 per share was 15.8% above analysts’ consensus estimates.
Is now the time to buy VAC? Find out in our full research report (it’s free).
Marriott Vacations (VAC) Q1 CY2025 Highlights:
- Revenue: $1.2 billion vs analyst estimates of $1.21 billion (flat year on year, 0.9% miss)
- Adjusted EPS: $1.66 vs analyst estimates of $1.43 (15.8% beat)
- Adjusted EBITDA: $192 million vs analyst estimates of $174.9 million (16% margin, 9.8% beat)
- Management raised its full-year Adjusted EPS guidance to $6.75 at the midpoint, a 1.5% increase
- EBITDA guidance for the full year is $765 million at the midpoint, above analyst estimates of $742.7 million
- Operating Margin: 10.8%, in line with the same quarter last year
- Guests: 1.54 million, down 28,000 year on year
- Market Capitalization: $2.34 billion
StockStory’s Take
Marriott Vacations’ first quarter results were shaped by a focus on cost management and ongoing modernization initiatives, as discussed by CEO John Geller. The company saw a rise in first-time buyer sales, which Geller attributed to targeted promotional strategies and leveraging data analytics to improve tour quality. However, owner arrivals and corresponding tours declined, with Geller noting, “owners had fewer plus points coming into the year, resulting in fewer owner tours.” While tour flow and package sales remained healthy, management was cautious about ongoing macroeconomic volatility, emphasizing the use of operational levers to support margins. Adjusted EBITDA growth was driven by higher development profit and strict control over corporate expenses, while rental profit declined due to higher costs. CFO Jason Marino highlighted improved delinquency rates and a deliberate adjustment in inventory mix to help lower product costs, underscoring efforts to maintain profitability despite revenue pressures.
Looking forward, Marriott Vacations’ updated guidance is underpinned by anticipated benefits from its modernization program and cost-saving measures. Management expects further growth in first-time buyer sales and improvements in owner arrivals as the year progresses, supported by new digital initiatives and expanded package offerings. Geller stated, “We are making good progress on our comprehensive digital strategy, focusing on increasing product utilization and expanding e-commerce options.” The company plans to accelerate the rollout of AI-driven tools and direct booking capabilities, while cost reductions from IT updates and inventory optimization are expected to contribute to margin stability. Marino added that the company will continue to prioritize organic growth and overhead reduction, anticipating incremental savings from automation and procurement initiatives. However, management acknowledged that maintaining tour growth and improving VPG (volume per guest) will be key to achieving the higher end of their full-year targets.
Key Insights from Management’s Remarks
Management pointed to first-time buyer growth and ongoing cost controls as the main drivers of first quarter performance, while emphasizing digital initiatives and inventory optimization to address revenue challenges and support future profitability.
-
First-time buyer momentum: The company achieved a 6% increase in first-time buyer sales, which management views as critical for long-term system health, even though these sales generally yield lower volume per guest (VPG) compared to existing owners.
-
Tour flow and owner arrivals: Although overall tour flow grew modestly, owner arrivals and related tours fell due to a decline in owners’ available plus points, reducing opportunities for owner-driven sales. Management expects improvement in owner arrivals later in the year.
-
Digital strategy and automation: Marriott Vacations advanced its digital transformation, expanding AI-powered phone agents in resort operations and increasing online bookings for points reservations. Nearly 70% of points reservations are now made online, reflecting a substantial shift toward digital engagement.
-
Inventory mix optimization: The company adjusted its inventory mix by repurchasing lower-cost inventory and reallocating sales among different brands and products, a move designed to reduce product costs and improve development margins. Management described this as “modulating” inventory to capitalize on available cost advantages.
-
Recurring revenue streams: Approximately 40% of adjusted EBITDA contribution comes from high-margin, recurring revenue sources such as annual maintenance fees and financing income, helping stabilize profitability even in periods of flat or declining contract sales.
Drivers of Future Performance
Looking ahead, management sees modernization efforts, digital initiatives, and product cost controls as primary levers for sustaining growth and protecting margins.
-
Modernization and cost efficiencies: The ongoing modernization program is expected to deliver $75 million to $100 million in annual run-rate cost savings over the next two years, with savings primarily from IT upgrades, automation, and organizational streamlining. Management believes these actions will support margin stability even if revenue growth is modest.
-
Tour growth and VPG improvement: Management expects future performance to hinge on the ability to increase qualified tour flow, especially from first-time buyers, and to raise VPG through targeted promotions and enhanced value propositions. As Geller noted, improving the mix and quality of tours will be crucial to reaching higher-end sales targets.
-
Inventory and asset optimization: The company plans to pursue further product cost reductions through ongoing inventory mix adjustments and noncore asset sales, including properties acquired in previous acquisitions. These actions are intended to support free cash flow and provide capital flexibility for future investments.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will track (1) the effectiveness of digital and AI-driven initiatives in improving tour flow and guest engagement, (2) the pace of cost savings and margin stabilization from modernization efforts, and (3) progress on inventory and asset optimization, including noncore asset sales. Execution on these fronts will be critical to supporting the company’s updated earnings guidance and long-term growth strategy.
Marriott Vacations currently trades at a forward P/E ratio of 10×. At this valuation, is it a buy or sell post earnings? See for yourself in our full research report (it’s free).
Stocks That Trumped Tariffs
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
