VAC
#Thank you.
Hey, <UNK>, it's <UNK>.
So for us, revenue reportability quarter to quarter, it's one of the reasons we don't provide quarterly guidance, quite frankly, because the GAAP accounting requires that you collect a 10% down payment.
And it's not just 10% of the purchase price; it includes things like recovering the value of first-day benefit, closing costs on your loan and things like that.
So we are always adjusting incentive programs, things like that, throughout the year.
Our focus and what we've done every year is, from a full-year perspective, we adjust the programs and the down payment requirement so that, on a full-year basis, the reportability really isn't much impact.
But given whatever programs we're running, higher financing propensity like we saw in the third quarter, that's where you see you can have some outsized impact.
So what do we do.
Like we did ---+ and this was an issue, if you will, in terms of reportability in the third quarter last year.
We had similar things.
We had introduced some new financing incentives back then.
We had higher financing propensity.
We tweaked the amount of the down payment to get a little bit more, and we've already put that in place here for fourth-quarter sales.
So what ends up happening is we get a couple of the payments on the sales in the third quarter on the loans.
We hit the reportability.
That hits ---+ we get the benefit of that here in the fourth quarter.
And then the new sales that we are doing with slightly higher down payments to reflect the incentives and the financing propensity levels, those should for the most part hit reportability in the fourth quarter.
They won't get pushed out into next year.
And that's how you kind of think about it.
You know reportability impacts us quarter to quarter, but it can impact us slightly more or less, and then we adjust for that to balance it out.
Hey, <UNK>.
This is <UNK>.
I'd add one thing to that.
And just a reminder that the way in which timeshare accounting works, you record the sales costs, except for a small amount of the commission expense, at the time that the contract sale is written.
And so there's a disconnect built in to the way in which GAAP works.
You have the costs ---+ sales and marketing costs mismatched from the revenues.
So we have a disproportionate amount of sales and marketing costs in the third quarter not matched up to reportable revenues, which will show up in the fourth quarter.
I think in general that's correct with one minor modification.
Our financing propensity is actually running even higher than we thought it was going to.
That's good news over the long-term because obviously you get financing revenues for a long time to come out of all this.
It does affect your reportability.
So, yes, I would say to you we probably have more reportability in the fourth quarter than we originally thought we were going to have.
But all of the other underlying fundamentals that we've talked about in terms of building this contract sales volume and everything else has remained relatively unchanged.
Thanks very much, Rob.
The third quarter was our best quarter of contract sales growth in over a year, as contract sales growth in our key North America and Asia-Pacific segments were up 8% on strong tour flow from new distributions and new marketing channels.
Even more positive as we enter the fourth quarter, the current trend is on track for solid mid-teens growth through the end of the year, laying the foundation for contract sales growth going into 2017.
I look forward to updating you on our fourth-quarter performance and our outlook for 2017 on our February call.
And finally, to everyone on the call and your families, enjoy your next vacation.
Thank you.
