Does the definition of 'Gross Rooms Revenue' for an Embassy Suites franchise include credit transactions?
Embassy_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
The Monthly Fees are calculated in accordance with the accounting methods of the thencurrent Uniform System of Accounts for the Lodging Industry, or as specified by us in the Manual. "Gross Rooms Revenue" means all revenues derived from the sale or rental of guest rooms (both transient and permanent) of the hotel, including revenue derived from the redemption of points or rewards under the loyalty programs in which the hotel participates, amounts attributable to breakfast (where the guest room rate includes breakfast), Mandatory Guest Fees, late cancellation fees, and guaranteed no-show revenue and credit transactions, whether or not collected, at the actual rates charged, less allowances for any guest room rebates and overcharges, and will not include taxes collected directly from patrons or guests. Group booking
Source: Item 6 — OTHER FEES (FDD pages 27–41)
What This Means (2025 FDD)
According to Embassy Suites' 2025 Franchise Disclosure Document, Gross Rooms Revenue does include credit transactions. Specifically, the definition encompasses all revenues from guest room rentals, including revenue from loyalty program redemptions, breakfast amounts (if included in the room rate), mandatory guest fees, late cancellation fees, guaranteed no-show revenue, and credit transactions. This calculation is made at the actual rates charged, before deductions for guest room rebates or overcharges, but excluding taxes collected directly from guests.
This definition is important for prospective franchisees because it directly impacts the calculation of Monthly Royalty Fees. By including credit transactions in Gross Rooms Revenue, Embassy Suites ensures that all forms of payment for room rentals contribute to the revenue base on which royalties are calculated. This comprehensive approach to revenue calculation is fairly standard in the hotel franchising industry, as it captures the total economic activity generated by room rentals.
It is important to note that while group booking rebates are included in the Gross Rooms Revenue calculation, taxes collected directly from patrons or guests are excluded. Understanding these inclusions and exclusions is crucial for accurate financial reporting and royalty payment calculations for Embassy Suites franchisees.