What is the basis for recognizing revenues for Caption By Hyatt based on the value transferred to the customer?
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 Caption By Hyatt's 2025 Franchise Disclosure Document, the brand recognizes revenues for performance obligations satisfied over time using an output method. This method is based on the value transferred to the customer, with revenues recognized based on the transaction price and observable outputs related to each performance obligation.
Caption By Hyatt deems specific factors as representative of progress in satisfying performance obligations. These include revenues and operating profits earned by hotels for access to Hyatt's intellectual property, revenues and operating profits of hotels for providing services under management and hotel services agreements, award night or point redemptions with third-party partners for loyalty program administration, and cardholder spending 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 tied to the actual value and benefits that customers receive. The brand uses observable outputs, such as hotel revenues and loyalty program activity, to gauge how well it is fulfilling its promises to customers. This approach ensures that revenue recognition aligns with the delivery of services and the value derived by customers, which can provide a more accurate reflection of Caption By Hyatt's financial performance.