How does Bw Premier Collection estimate breakage for points in the BWR program?

According to the 2025 FDD, Bw Premier Collection estimates the breakage for points in its Best Western Rewards (BWR) program based on historical experience and expectations of future BWR member behavior. This estimation process includes analyses performed by and input from third-party actuaries. Breakage refers to the points that BWR members are unlikely to ever redeem. This estimate impacts the amount of revenue Bw Premier Collection recognizes upon point redemption.

The BWR program allows members to earn points from past activities, which they can redeem for goods or services at Bw Premier Collection hotels. The costs of operating the BWR program, such as marketing and promotion, are charged to the BWH hotels through assessment fees based on members' qualified expenditures. These fees are initially deferred and then recognized as program revenues as the loyalty points are redeemed and the related services are provided, net of redemption expenses.

Program revenues that exceed redemption costs are used to cover the operational expenses of the BWR program. All BWR program costs are recognized as incurred and are recorded in program cost of sales in the Consolidated Statements of Revenues and Expenses. This approach ensures that Bw Premier Collection accounts for the loyalty program's financial impact by carefully estimating breakage and allocating revenues and expenses accordingly.