We’re already seeing that. And what happens on the ABS transactions, they have about a 3.5-year life. So the less expensive ones that we did, but truly ended in the middle of 2022, we’ll finally kind of be all rolled off by the middle of 2025. So that interest headwind should basically be neutral in ’25 and then start to become a tailwind in ’26 as the more expensive transactions that we put in place in late ’22 and throughout ’23, start to roll off. So you factor that into the growth that we’re able to generate even covering some of that headwind. And that’s really the big item that gets us back to long-term growth of high-single digits over the next several years.
Joe Greff: Got it. And then my final question is, buyback flows fairly substantially from the fourth quarter versus earlier in the year, it slowed down from the 3Q, which was slower than what was in the 2Q and 1Q. What’s driving that lower activity?
Mike Hug: Really, when we look at our total capital allocation strategy, we’ve talked about, if the right opportunity presents itself to invest in the business, we’re going to make that decision to help drive once again, the high digit long-term growth that we talked about. So what we looked at, obviously, as we got into the second half of the year as we had the opportunity to invest $41 million in Sports Illustrated, a great opportunity that we’re very excited about. And as we talk about all these things that when we look at M&A it’s really the marketing opportunity that presents to us, and that’s what we think the Sports Illustrated brand as well as the relationships with the universities that we’ll be working with offers that opportunity.
So when we think about how we use our free cash flow, obviously, the dividend is very important to us as demonstrated where we increased it again this year, and then we’ll look at M&A and absent M&A or the ability to invest in the long-term growth of the business, the difference goes to share repurchases. So that’s why you see share repurchases being down in the second half of the year was because, right, we had executed on the Sports Illustrated opportunity. And then you’ll really see the same thing in the first quarter this year where the acquisition of Accor, which we’re very excited about for just under $50 million will come out of our free cash flow and as part of our capital allocation strategy.
Joe Greff: Great. Thank you.
Mike Hug: Sure. Thank you.
Operator: Our next question is from David Katz with Jefferies. Please proceed.
David Katz: Hi. Good morning, everyone. Thanks for taking my question. I wanted to just go back to the capital allocation choices and in view of what is obviously enthusiasm for some of the new brands and channels. I just wanted to make sure to sort of capture your philosophies about capital returns, obviously, with repurchases and dividends being paramount for the story for many years. Any change in the philosophy about those policies or strategies near term given some of these new initiatives?
Michael Brown: Good morning, David. There’s no change in our capital allocation strategy. I think for the last five years, we’ve said dividends are the foundation and then you’re consistently choosing between strategic M&A opportunities and share repurchases, and we’ll only act on anything M&A as it relates to what we think is, has the right IRR and also fits into our long-term strategy. Sports Illustrated does exactly that. And for the ability to grow with a brand of that quality with the marketing capabilities that come along with it, which is lifestyle, leisure in the hospitality space, combined with a world-class hospitality brand like Accor, which really strategically decided to put on pause its sales effort in Asia Pacific region, post-pandemic.
The opportunity to get an existing operation, 30,000 members with a brand to the quality of Accor made complete sense to us. As Mike mentioned, we returned 15% of our capital through dividends and share repurchases last year. On top of this, yes, pretty much the same the year prior. And when we saw these two opportunities to invest in the long-term growth of this business to support our long-term initiatives to be in high single digits, it was really an easy choice for us, and we couldn’t be more excited about it.
David Katz: Understood. And just to follow up, I think the essence to the question is whether something Accor or others like it, are consumers of capital in ways that alter the path. And it sounds like it’s no, I just want to make sure.
Michael Brown: Look, we’re in the business of leisure vacations in the vacation ownership space. And I think our 2023 execution against that shows that our business model performs extremely well. And if we have the opportunity to invest in the long-term success of our business — look, Accor is more immediate because it’s an existing operation of size — of relatively decent size as far as their owner base in resort system and to build something like Sports Illustrated from ground up is, it is an investment in what we do well, which is leisure vacations and vacation ownership. And in the absence of those opportunities going forward, we’ll use our free cash flow to keep ploughing into share repurchases and paying the increased dividend.
Mike Hug: And David, on the use of capital, it would be our intent on both Accor and Sports Illustrated to have delivery — inventory delivered on a just-in-time basis. So we’ll work with our partners to make sure that inventory comes in when the revenue starts to come in.
David Katz: Got it. Thank you.
Mike Hug: Sure. Thank you.
Operator: Our next question is from Patrick Scholes with Truist Securities. Please proceed.
Patrick Scholes: Hi, good morning, Michael and Mike, could you talk a little bit about expectations or growth rates for tours. It looked like at least versus Street consensus numbers, VPG was a little bit lighter, but implied in there because gross VOI sales in line — maybe towards your expectations for tours a little bit better than us analysts. First, could you, yes, talk about that please?
