What method does Caption By Hyatt use to recognize revenues for the performance of the hotel?
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.
Within our management and hotel services agreements, we have two performance obligations: providing access to Hyatt's IP and providing management and hotel services. Although these constitute two separate performance obligations, both obligations represent services that are satisfied over time, and we recognize revenues using an output method based on the performance of the hotel. Therefore, we have not allocated the transaction price between these two performance obligations as the allocation would result in the same pattern of revenue recognition.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, revenues are recognized using an output method based on the value transferred to the customer for each performance obligation satisfied over time. The revenues are based on the transaction price and the observable outputs related to each performance obligation.
Caption By Hyatt deems revenues and operating profits earned by the hotels during the reporting period for access to Hyatt's IP as indicative of the value third-party owners and franchisees derive. They also consider revenues and operating profits of the hotels for the promise to provide services to the hotels under management and hotel services agreements. Other indicators include 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 management and hotel services agreements, Caption By Hyatt has two performance obligations: providing access to Hyatt's IP and providing management and hotel services. Both obligations represent services that are satisfied over time, and revenues are recognized using an output method based on the performance of the hotel. Therefore, the transaction price is not allocated between these two performance obligations as the allocation would result in the same pattern of revenue recognition.