What is the role of Caption By Hyatt in administering the loyalty program?
Caption_By_Hyatt Franchise · 2025 FDDAnswer from 2025 FDD Document
• Loyalty program administration—We administer the loyalty program for the benefit of Hyatt's portfolio of properties during the period of their participation in the loyalty program. Under the program, members earn points based on their spend at our properties and through our experience platform; by transacting with our strategic loyalty alliances, including American Airlines and Peloton; or in connection with spend on the World of Hyatt cobranded consumer and business credit cards. Loyalty program points can be redeemed for the right to stay at participating properties, as well as for other goods and services from third parties. Points earned by loyalty program members represent a material right to free or discounted goods or services in the future.
The loyalty program has one performance obligation that consists of marketing and managing the program and arranging for award redemptions by members. These two promises are not distinct because the promise to market and manage the program does not benefit the customer without the related arrangement for award redemptions. The costs of administering the loyalty program are charged to the properties through an assessment fee based on members' qualified expenditures. The assessment fee is billed and collected monthly, and revenues received by the program are deferred until a member redeems points. Upon redemption of points at managed and franchised properties, we recognize the previously deferred revenue in revenues for reimbursed costs on our
consolidated statements of income, net of redemption expense paid to managed and franchised hotels. We are responsible for arranging for the redemption of promotional awards, but we do not directly fulfill the award night obligation except at owned and leased hotels. Therefore, we are the agent with respect to this performance obligation for managed and franchised hotels, and we are the principal with respect to owned and leased hotels. A portion of our owned and leased revenues is deferred upon initial stay as points are earned by program members at owned or leased hotels, and revenues are recognized upon redemption at owned or leased hotels.
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Caption By Hyatt's 2025 Franchise Disclosure Document, Caption By Hyatt administers the loyalty program for the benefit of Hyatt's portfolio of properties during their participation in the program. Members earn points based on spending at Hyatt properties, through the experience platform, by transacting with strategic loyalty alliances like American Airlines and Peloton, or through spend on World of Hyatt co-branded credit cards. These points can be redeemed for stays at participating properties and other goods/services from third parties. The loyalty program's points represent a material right to future free or discounted goods/services.
The loyalty program involves marketing, managing the program, and arranging for award redemptions. These functions are bundled together because marketing and managing the program only benefit customers when award redemptions are available. The costs of running the loyalty program are passed on to the properties through an assessment fee based on members' qualified expenditures. This fee is billed and collected monthly, and the revenues are deferred until members redeem their points.
Upon redemption of points at managed and franchised properties, Caption By Hyatt recognizes the previously deferred revenue as revenues for reimbursed costs, net of redemption expenses paid to the hotels. Caption By Hyatt is responsible for arranging the redemption of promotional awards but does not directly fulfill the award night obligation, except at owned and leased hotels. Therefore, for managed and franchised hotels, Caption By Hyatt acts as an agent, while for owned and leased hotels, it acts as the principal. A portion of revenues from owned and leased properties is deferred when points are earned and recognized upon redemption at those properties.
For a Caption By Hyatt franchisee, this means they will be charged an assessment fee to cover the costs of the loyalty program, which is calculated based on members' qualified expenditures at their property. They will benefit from the loyalty program by attracting and retaining customers who are members, but they will also need to manage the redemption of points for stays at their location, with Caption By Hyatt handling the financial aspects of revenue recognition and expense reimbursement related to these redemptions.