Last Update 06 Dec 25

Fair value Decreased 0.041%

TNL: Vacation Ownership Momentum And New Brand Expansion Will Shape Earnings Outlook

Analysts have modestly lifted their price target for Travel + Leisure by about $1 to align with stronger Q3 execution and improving momentum in vacation ownership and new brand initiatives, even as they temper long term growth and discount rate assumptions.

Analyst Commentary

Street research updates reflect a more constructive stance on Travel + Leisure, with multiple firms nudging price targets higher in response to a stronger than expected Q3, improving operational execution and expanding brand initiatives.

Bullish Takeaways

Bullish analysts highlight that Q3 delivered a clear beat, driven by stronger tour volumes, better sales efficiency and higher travel club and membership transactions. This is supporting upward revisions to earnings forecasts and price targets.
Momentum in the vacation ownership segment is seen as a key driver of sustainable growth. This is reinforcing confidence in the company’s core model and underpinning premium valuation multiples relative to historical levels.
New brand partnerships and concepts are viewed as expanding the addressable market and creating additional top line catalysts. Bullish analysts argue these are not yet fully reflected in the current share price.
The improving core timeshare business and early signs of stabilization in the travel and membership segment are cited as enhancing the medium term EPS and EBITDA growth profile. This is helping to justify higher target prices.

Bearish Takeaways

Bearish analysts, while acknowledging recent execution, maintain more cautious stances on the shares. Neutral ratings are framed around a view that much of the near term recovery may already be priced in.
There is concern that some of the growth drivers, particularly new brand initiatives and licensing deals, are still underappreciated and not fully understood by the broader market. This creates execution risk if ramp up timelines extend.
Variation in stock performance across the vacation ownership peer group underscores sensitivity to execution. This is leading more conservative analysts to temper longer term growth and discount rate assumptions despite near term beats.
Macro independent improvements in credit provision and profitability are encouraging but still need to be proven durable across cycles. This is limiting how far more cautious analysts are willing to stretch valuation multiples at this stage.

What's in the News

Raised full year 2025 guidance for Gross VOI sales to a range of $2.45 billion to $2.50 billion, tightening and slightly lifting the prior outlook of $2.4 billion to $2.5 billion (Corporate Guidance, Raised).
Announced a new Sports Illustrated Resorts location in downtown Chicago, Illinois, marking the brand's third planned site and further extending its multi brand vacation ownership and lifestyle resort strategy (Business Expansions).
Plans call for converting an existing Loop hotel along the Chicago River into a roughly 250 unit Sports Illustrated inspired resort, with phased opening beginning this winter and full completion targeted for late 2026 (Business Expansions).
The Chicago resort will feature flexible, points based ownership options, upgraded amenities including an owner's lounge and fitness center, and new food and beverage venues such as a coffee shop, restaurant, and sports bar, with sales expected to begin early next year (Business Expansions).
Between July 1 and September 30, 2025, the company repurchased 1,168,760 shares for $70.01 million, bringing total buybacks under its long running program to 133,583,548 shares for $6,798.25 million (Buyback Tranche Update).

Valuation Changes

Fair Value: edged down slightly from $74.36 to $74.33 per share, reflecting a largely unchanged intrinsic value assessment.
Discount Rate: decreased modestly from 12.04 percent to 11.79 percent, implying a slightly lower required return and risk premium.
Revenue Growth: trimmed from 3.99 percent to 3.60 percent, signaling a more cautious outlook on top line expansion.
Net Profit Margin: nudged higher from 10.74 percent to 10.86 percent, indicating a small improvement in expected profitability.
Future P/E: eased marginally from 12.45x to 12.36x, suggesting a slightly lower valuation multiple on forward earnings.

Expansion into new brands and markets, along with tech investments, is broadening the customer base and improving operational efficiency and margins.
Growing Millennial and Gen Z demand, combined with recurring revenue streams and an asset-light model, supports sustained membership and earnings stability.
Heavy reliance on US vacation ownership exposes the company to structural industry challenges, competitive threats, and demographic risks, limiting growth and increasing earnings vulnerability.

Catalysts

About Travel + Leisure

Provides hospitality services and travel products in the United States and internationally.What are the underlying business or industry changes driving this perspective?

The expansion into new brands (Accor, Sports Illustrated Resorts, Margaritaville) and international markets, particularly with support from leading global hospitality partners, is expected to broaden Travel + Leisure's customer base and diversify revenue streams, positioning the company for sustained long-term top-line growth.
The company is benefiting from increased demand among Millennials and Gen Z, who prioritize experiences and travel, demonstrated by 65% of new buyers coming from these demographics, supporting long-term membership growth and driving repeat business, which should help maintain or increase revenue visibility.
Strategic investments in technology-including enhanced mobile apps and AI-driven personalization-are improving booking efficiency, owner engagement, and direct booking rates, which is likely to support higher net margins through operational leverage and reduced dependency on third-party platforms.
The continuation of an asset-light development strategy, coupled with disciplined underwriting and robust inventory recovery processes, is improving capital efficiency and supporting steady or expanding EBITDA margins by containing costs and enhancing the quality of the owned loan portfolio.
The strong and growing pipeline of predictable, recurring revenue from owner upgrades, management fees, and financing activity (with 75% of revenue recurring), along with a $20 billion ten-year revenue pipeline, underpins dependable free cash flow generation and earnings stability for future periods.

Travel + Leisure Earnings and Revenue Growth

Travel + Leisure Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Travel + Leisure's revenue will grow by 3.9% annually over the next 3 years.
Analysts assume that profit margins will increase from 10.1% today to 11.5% in 3 years time.
Analysts expect earnings to reach $506.9 million (and earnings per share of $8.77) by about September 2028, up from $396.0 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.4x on those 2028 earnings, up from 10.2x today. This future PE is lower than the current PE for the US Hospitality industry at 23.9x.
Analysts expect the number of shares outstanding to decline by 4.88% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 12.32%, as per the Simply Wall St company report.

Travel + Leisure Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The Travel and Membership segment is facing persistent structural headwinds due to industry consolidation and changing business practices by larger clubs; recent affiliate M&A activity caused an unanticipated disruption and significant revenue/EBITDA decline (-6% and -11% YoY, respectively), which could continue to drag on overall company revenue and earnings if not addressed or successfully repositioned.
Growth remains highly concentrated in the core Vacation Ownership segment, with over 75% of revenue tied to this business line-overdependence could create earnings vulnerability if consumer tastes evolve or market downturns impact timeshare or vacation club demand, especially as competing models (e.g., short-term rental platforms) grow.
The company's international expansion strategy, while offering upside, is limited by the fact that timeshare remains overwhelmingly a US-centric product (over 90% of current revenue from the US); this constrains future top-line growth and exposes them to demographic risks in the US, such as an aging population reducing the long-term growth runway of their primary customer base.
Despite strong near-term consumer credit quality, the business remains sensitive to economic cycles and interest rate fluctuations-delinquency provisions have only recently stabilized and the company maintains a leverage ratio above 3x (expecting to trend up seasonally), which could pressure net margins and cash flow if macroeconomic conditions worsen.
Heightened competition and evolving consumer expectations, particularly from digital-first travel platforms and alternative accommodation providers, threaten to disrupt the traditional vacation ownership model, potentially eroding Travel + Leisure's market share, pricing power, and ability to sustain current revenue and net margin levels over the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $67.455 for Travel + Leisure based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $73.0, and the most bearish reporting a price target of just $54.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.4 billion, earnings will come to $506.9 million, and it would be trading on a PE ratio of 10.4x, assuming you use a discount rate of 12.3%.
Given the current share price of $62.22, the analyst price target of $67.45 is 7.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on Travel + Leisure?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Momentum In Core Segments And New Brands Will Drive Broader Expansion