This company is the world's largest operator of vacation ownership (timeshare) businesses as well as vacation exchange/network and other travel-related businesses. This segment had 247 vacation ownership resorts and 867,000 owners as of December 31, 2020.
The Travel and Membership segment, which is comprised of Panorama and Travel + Leisure Group, provides various fee-based travel services and includes RCI, a vacation exchange business that recently consisted of about 3.7 million members and relationships with 4,200 vacation ownership resorts in about 110 countries.
We note the Covid-19 pandemic has continued to weigh on the company's operations into 2021, following earlier temporary closures of its owned and affiliate resorts amid travel and capacity restrictions, as well as suspension of its sales and marketing operations.
This situation hurt tour and VOI sales, reduced bookings, and increased cancellations. Still, with a likely easing of Covid-19 concerns in the months ahead, we think TNL is relatively well positioned for an expected return of leisure travel with a widespread availability of vaccines by the second half of 2021.
To this end, in late February 2021, the company noted its advance bookings for H2 2021 were closely tracking its pre-pandemic levels, with continued sequential monthly improvement in the underlying trends.
Meanwhile, following the sale in May 2018 and October 2019 of its vacation rental businesses in Europe and North America, respectively, TNL has significantly realigned its portfolio through some divestitures and seemingly well-timed strategic acquisitions to further expand its offerings beyond the core timeshare business.
In January 2021, TNL acquired the Travel + Leisure brand (with its nearly 60,000 travel club members) from Meredith Corp. (MDP) in a $100 million deal that should provide additional monetization opportunities across multiple platforms and foster a strategic alliance between the parties.
Our 12-month target of $72 reflects an EV/EBITDA multiple of about 12.5x our 2022 estimate, a notable (and we think relatively attractive) discount versus the company’s hotels and lodging peers.
In May 2020, TNL suspended its share buybacks, and in late July, it set a 40% reduction to its dividend, dividend, which was followed in August by the issuance of about $575 million in asset-backed notes, to shore up its liquidity.
Consequently, with about $1.2 billion in cash (plus about $400 million availability under a revolving credit facility), we calculate the company has relatively ample liquidity cushion in the near term.