Marriott Vacations Targets Sharp 2026 Free Cash Flow Increase

Marriott Vacations Worldwide Corporation (NYSE: VAC) expects a sharp increase in adjusted free cash flow in 2026 as contract sales and adjusted EBITDA grow, supported by lower inventory spending, improved financing cash flow and cost actions. In a November 4 investor presentation accompanying its third-quarter 2026 update, the vacation ownership company projected adjusted free cash flow of $410 million to $430 million, compared with $145 million in 2025.

The midpoint of the range represents year-over-year growth of about 190%. Marriott Vacations also expects 2026 contract sales of $2.12 billion to $2.14 billion, up about 21% at the midpoint from $1.76 billion in 2025.

Adjusted EBITDA is forecast at $810 million to $830 million. That compares with pro forma 2025 adjusted EBITDA of $738 million and implies approximately 11% growth at the midpoint. The pro forma figure reflects the reclassification of $13 million in warehouse credit facility interest expense from corporate interest expense to consumer financing expense. Reported 2025 adjusted EBITDA was $751 million.

Cash Flow and Profitability Actions

The company’s adjusted free cash flow forecast includes an expected $15 million to $20 million contribution from inventory in 2026, compared with a $113 million use of cash in 2025. Financing activity is projected to contribute $50 million to $55 million after using $56 million in the prior year.

Cash taxes are expected to decline to $120 million to $125 million from $174 million, while cash interest is projected at $165 million to $170 million, compared with $135 million in 2025. Corporate capital expenditures are expected to be about $60 million, broadly in line with $57 million last year. Working capital and other items are forecast to use $115 million to $125 million, versus $71 million in 2025.

Marriott Vacations said it has revised its Asia-Pacific strategy, reduced inventory spending during the year and cut overhead costs as part of its effort to improve profitability and cash generation. The company also anticipates receiving an additional $200 million in cash from sales of non-core assets by the end of 2027.

The 2026 outlook is provided only on a non-GAAP basis. It excludes potential effects from certain asset sales, foreign currency movements, restructuring and modernization costs, litigation charges and impairments because the company said those items cannot be forecast with sufficient accuracy and may be significant.

Sales and Recurring Revenue Strategy

Marriott Vacations is pursuing new commercial initiatives designed to increase tours and contract sales. These include experiential event marketing, new loyalty tiers, expanded brand-affinity tours, data-driven tour logistics, stronger connections with guests already at its resorts, and efforts to improve sales effectiveness and talent.

The company said approximately 80% of its 2025 contract sales came from resort guests. It also draws prospective customers from loyalty programs associated with its Marriott- and Hyatt-branded offerings. Marriott’s loyalty program had 309 million members as of September 30, 2026, while Hyatt’s had 63 million members at the end of 2025.

Adding first-time buyers remains another priority because an initial vacation ownership purchase can generate subsequent financing, management, rental and ancillary revenue. Marriott Vacations added about 100,000 first-time buyers from the first quarter of 2021 through the fourth quarter of 2025. Millennials and Generation X customers accounted for 65% of 2025 contract sales, according to the presentation.

About 40% of the company’s adjusted EBITDA contribution comes from recurring sources. Based on 2025 results, management and exchange activities represented 36% of contribution, financing 20%, rentals 12% and development 32%.

The Vacation Ownership segment generated about 90% of 2025 adjusted EBITDA, while Exchange and Third-Party Management contributed approximately 10%. The latter business produced $91 million of segment adjusted EBITDA at a 45% margin in 2025 and required capital expenditures equal to 4% of revenue excluding cost reimbursements. Its growth priorities include adding affiliations and management contracts, using data and technology to accelerate marketing, and expanding product offerings.

Liquidity and Risks

Marriott Vacations reported approximately $1.1 billion of liquidity as of September 30, including $229 million of cash and cash equivalents, $776 million of additional revolving-credit capacity and $97 million of gross notes receivable eligible for securitization and not held in its warehouse facility.

The company identified risks including changes in global economic, trade, travel and regulatory conditions; inflation; interest-rate and foreign-exchange movements; credit-market volatility; financing delinquencies and defaults; severe weather; geopolitical conflict; technology and cybersecurity challenges; and its ability to complete non-core asset sales. Results could also be affected by demand for vacation ownership products, inventory availability, workforce retention, competition and the execution of cost-reduction and growth initiatives.