When is revenue recognized for points and free night certificates within the Crowne Plaza system?

According to Crowne Plaza's 2025 Franchise Disclosure Document, revenue pertaining to points and free night certificates is recognized when the member uses the points or certificates at a participating hotel or selects a reward from a third party. This revenue recognition is net of the cost of reimbursing the hotel or third party providing the benefit. This means that Crowne Plaza only accounts for the net amount they receive after paying out the costs associated with the reward redemption.

Judgment is needed to estimate the stand-alone selling prices, which rely on generally accepted valuation methods regarding the value of the license provided and the number of points and certificates expected to be issued. However, the FDD states that the value of revenue recognized and the deferred revenue balance at the end of the year is not materially sensitive to changes in these assumptions. This suggests that while estimations are involved, they do not significantly impact the overall financial reporting.

For a Crowne Plaza franchisee, this accounting practice means that the fees they pay into the system for loyalty points are not immediately recognized as revenue by the franchisor. Instead, the revenue is deferred until the points or certificates are actually used by customers. This delay in revenue recognition can affect the franchisor's reported earnings in the short term, particularly as the IHG One Rewards program grows and more points are issued but not yet redeemed. Franchisees should understand that the financial performance of the loyalty program, as reflected in the franchisor's financial statements, is tied to actual usage of the rewards by program members.