Fitch Upgrades Travel + Leisure Outlook to Positive on Improving Leverage

Fitch Ratings has revised its outlook on Travel + Leisure Co. (NYSE: TNL) to Positive from Stable, signaling confidence in the company's ability to reduce its debt load. The ratings agency affirmed the vacation company's Long-Term Issuer Default Rating at 'BB-'.

Improved Leverage Drives Outlook

The upgrade to a Positive outlook is based on Fitch's expectation that Travel + Leisure's EBITDA leverage will trend below 3.5x. This improvement is anticipated to be driven by EBITDA growth from steady tour flow, higher volume per guest, and synergies from recent acquisitions.

According to the ratings agency, leverage is forecast to rise slightly to 3.7x in 2026 from 3.6x in 2025, before declining to approximately 3.4x by 2028. Fitch also affirmed the company's senior secured credit facility, term loans, and senior secured notes at 'BB+' with a Recovery Rating of 'RR2'.

Business Strengths and Acquisitions

Fitch highlighted several core strengths supporting Travel + Leisure's credit profile, including its top-three position in the timeshare industry and a business model that generates consistent positive free cash flow.

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Key supporting factors noted by Fitch include:

• A large, recurring revenue stream, with about 75% of 2025 revenue expected from predictable sources like upgrade sales, management fees, and consumer financing.
• The largest owner base among rated timeshare peers, at approximately 900,000 following recent acquisitions.
• A high-quality customer base, with the weighted-average FICO score of new originations rising to 739 as of June 2026.

The agency views the July 2026 acquisitions of Yes& Vacations and Spinnaker Resorts as a positive for the company's business profile, adding about 100,000 owners and 23 resorts. The upfront costs were managed with cash and existing facilities, not affecting capital return commitments.

Forward-Looking Assumptions

While positive, Fitch's rating is constrained by the company's exposure to discretionary travel spending and the mature, cyclical nature of the domestic timeshare market. The agency's forecast assumes total revenue growth in the low- to mid-single digits from 2026 through 2029, with EBITDA margins remaining stable at approximately 25% to 26% through 2028.