How does Crowne Plaza recognize revenue from guest deposits received in advance of hotel stays?
Crowne_Plaza Franchise · 2025 FDDAnswer from 2025 FDD Document
At its owned and leased hotels, the Company's performance obligation is to provide accommodation and other goods and services to guests. Revenue includes rooms revenue and food and beverage sales, which are recognized when the rooms are occupied and food and beverages are sold. Guest deposits received in advance of hotel stays are recorded as deferred revenue on the consolidated balance sheets. They are recognized as revenue along with any balancing payment from the guest when the associated stay occurs.
Source: Item 23 — Receipts (FDD pages 100–424)
What This Means (2025 FDD)
According to Crowne Plaza's 2025 Franchise Disclosure Document, guest deposits received in advance of hotel stays are initially recorded as deferred revenue on the consolidated balance sheets. This means that when a guest pays a deposit for a future stay, Crowne Plaza does not immediately recognize it as revenue. Instead, it is held as a liability, reflecting the obligation to provide accommodation in the future.
The deferred revenue is recognized as actual revenue when the associated hotel stay occurs. At that time, Crowne Plaza recognizes both the deferred revenue from the initial deposit and any balancing payment received from the guest. This approach aligns the revenue recognition with the actual delivery of accommodation services.
This accounting practice is standard in the hotel industry, as it ensures that revenue is only recognized when the service has been provided. For a Crowne Plaza franchisee, this means that while advance deposits provide cash flow, they do not immediately contribute to the reported revenue until the guest stay takes place. Franchisees should be aware of this timing difference when forecasting revenue and managing their finances.