How does Baymont Inn Suites earn revenues from its Wyndham Rewards loyalty program?
Baymont_Inn_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
NIFICANT ACCOUNTING POLICIES**
Principles of Consolidation
When evaluating an entity for consolidation, the Company first determines whether an entity is within the scope of the guidance for consolidation of variable interest entities ("VIEs") and if it is deemed to be a VIE. If the entity is considered to be a VIE, the Company determines whether it would be considered the entity's primary beneficiary. The Company consolidates those VIEs for which it has determined that it is the primary beneficiary. The Company will consolidate an entity not deemed a VIE upon a determination that it has a controlling financial interest. For entities where the Company does not have a controlling financial interest, the investments in such entities are classified as available-for-sale securities or accounted for using the equity method, as appropriate.
Use of Estimates and Assumptions
The preparation of the Consolidated Financial Statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Consolidated Financial Statements and accompanying notes. Although these estimates and assumptions are based on the Company's knowledge of current events and actions it may undertake in the future, actual results may ultimately differ from estimates and assumptions.
Revenue Recognition
The principal source of revenues from franchising hotels is ongoing royalty, marketing and reservation fees, which are typically a percentage of gross room revenues of each franchised hotel. For a more detailed description of revenue recognition see Note 3 - Revenue Recognition.
Loyalty Program
The Company operates the Wyndham Rewards loyalty program. Loyalty members primarily accumulate points by staying in hotels operated under one of the Company's brands. Wyndham Rewards members may also accumulate points by purchasing everyday services and products with their Wyndham Rewards co-branded credit card.
The Company earns revenue from these programs (i) when a member stays at a participating hotel or club resort or vacation rental from a fee charged by the Company to the property owner or manager, which i
Source: Item 23 — RECEIPTS (FDD pages 97–443)
What This Means (2025 FDD)
According to Baymont Inn Suites's 2025 Franchise Disclosure Document, the company generates revenue from the Wyndham Rewards loyalty program through two primary avenues. First, when a loyalty program member stays at a participating hotel, club resort, or vacation rental, Baymont Inn Suites charges the property owner or manager a fee. This fee is calculated as a percentage of the room revenues generated from the member's stay. Baymont Inn Suites recognizes this revenue, net of redemptions, over time, based on loyalty point redemption patterns, which includes an estimate of points that will expire or never be redeemed.
Secondly, Baymont Inn Suites earns revenue based on a percentage of the member's spending on the Wyndham Rewards co-branded credit cards. A third-party issuing bank pays these revenues to the company. Similar to the first revenue stream, Baymont Inn Suites primarily recognizes this revenue over time, based on the redemption patterns of the loyalty points earned through the credit card program, also accounting for points that are estimated to expire or never be redeemed.
The FDD also mentions that as members accumulate points, Baymont Inn Suites records a liability for the estimated future redemption costs. This liability is calculated based on an estimated cost per point and an estimated redemption rate of the overall points earned. The company uses historical experience, current trends, and actuarial analysis from a third-party firm to determine these estimates. As of December 31, 2024, the recorded liability related to the program totaled $105 million, with $65 million included in accrued expenses and other current liabilities, and $40 million in other non-current liabilities on the company's Consolidated Balance Sheets.
For a prospective franchisee, this means that participation in the Wyndham Rewards program is mandatory, as stated in the FDD. Franchisees will be charged a 'Loyalty Program Charge,' as detailed in Schedule C of the franchise agreement. The Wyndham Rewards Front Desk Guide provides additional standards that franchisees must adhere to, and these standards, including fees and reimbursement rates, can be revised by Baymont Inn Suites or its affiliates with thirty days' notice.