For Atwell Suites owned and leased hotels, what constitutes the Company's performance obligation?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
At its owned and leased hotels, the Company's performance obligation is to provide accommodation and other goods and services to guests. Revenue includes rooms revenue and food and beverage sales, which are recognized when the rooms are occupied and food and beverages are sold. Guest deposits received in advance of hotel stays are recorded as deferred revenue on the consolidated balance sheets. They are recognized as revenue along with any balancing payment from the guest when the associated stay occurs.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites' 2025 Franchise Disclosure Document, the company's performance obligation at its owned and leased hotels is to provide accommodation and other goods and services to guests. This includes rooms revenue and food and beverage sales. The revenue is recognized when the rooms are occupied and the food and beverages are sold.
Guest deposits received in advance of hotel stays are initially recorded as deferred revenue on the consolidated balance sheets. This deferred revenue is then recognized as actual revenue, along with any balancing payment from the guest, when the guest's stay actually occurs. This accounting practice ensures that revenue is recognized in the period when the services are provided, aligning with standard accounting principles.
For a prospective Atwell Suites franchisee, this means that the revenue recognition for company-owned and leased hotels is straightforward: it happens when the service is delivered. This contrasts with franchise agreements, where revenue recognition might be tied to royalty fees based on a percentage of gross rooms revenue over time.