What is the basis for recognizing revenues for Caption By Hyatt based on the transaction price?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
For each performance obligation satisfied over time, we recognize revenues using an output method based on the value transferred to the customer. Revenues are recognized based on the transaction price and the observable outputs related to each performance obligation. We deem the following to represent our progress in satisfying these performance obligations:
- revenues and operating profits earned by the hotels during the reporting period for access to Hyatt's IP as it is indicative of the value third-party owners and franchisees derive;
- revenues and operating profits of the hotels for the promise to provide services to the hotels under management and hotel services agreements;
- award night redemptions or point redemptions with third-party partners for the administration of the loyalty program performance obligation; and
- cardholder spend for the license to the Hyatt name through our co-branded credit card programs as it is indicative of the value our partner derives from the use of our name.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to the 2025 FDD, Caption By Hyatt recognizes revenues based on the transaction price and observable outputs related to each performance obligation. For each performance obligation satisfied over time, revenues are recognized using an output method based on the value transferred to the customer. This means that the revenue recognized is tied to the progress in satisfying the performance obligations.
Caption By Hyatt deems specific factors to represent progress in satisfying performance obligations. These factors include revenues and operating profits earned by the hotels during the reporting period for access to Hyatt's intellectual property, revenues and operating profits of the hotels for providing services under management and hotel services agreements, award night redemptions or point redemptions with third-party partners for the administration of the loyalty program performance obligation, and cardholder spend for the license to the Hyatt name through co-branded credit card programs.
For franchisees, this means that Caption By Hyatt's revenue recognition is closely linked to the actual performance and value delivered to customers and partners. The use of observable outputs ensures that revenue is recognized in a manner that reflects the true economic substance of the transactions. This approach is common in the hospitality industry, where revenue is often tied to specific services provided and customer activity.