What is the Even Hotels definition of Gross Rooms Revenue based on?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
| Revised ¹ | Revised ¹ | ||
|---|---|---|---|
| Revenues | |||
| Fee business | $ 896,837 | $ 869,949 | $ 808,297 |
| Hotel operations | 92,579 | 88,417 | 78,787 |
| Other | 339,236 | 304,264 | 264,377 |
| System Fund and reimbursable revenues | 2,425,248 | 2,280,490 | 1,880,587 |
| Total revenues | 3,753,900 | 3,543,120 | 3,032,048 |
| Operating expenses | |||
| Bad debt expense (release) (Note 2) | 9,170 | ( 1,988) | ( 3,495) |
| Property and other taxes, insurance and leases | 25,576 | 46,084 | 49,435 |
| Maintenance and repairs | 51,344 | 59,588 | 48,991 |
| General and administrative expenses | 574,738 | 563,909 | 414,334 |
| Other hotel operations | 9,038 | 7,798 | 7,397 |
| Mark-up cost charged by affiliated companies | 12,904 | 16,240 | 12,684 |
| Allocation of expenses to affiliated companies | (155,437) | (168,690) | (134,560) |
| Depreciation and amortization of software | 32,766 | 33,911 | 36,042 |
| Amortization of finite-lived intangible assets | 4,636 | 5,734 | 5,088 |
| Impairment loss | 2,466 | – | – |
| System Fund and reimbursable expenses | 2,506,056 | 2,267,068 | 1,988,196 |
| Total operating expenses | 3,073,257 | 2,829,654 | 2,424,112 |
| Operating income | 680,643 | 713,466 | 607,936 |
| Interest expense – external | (25,746) | (24,680) | (25,519) |
| Interest income from affiliates, net | 287,364 | 252,394 | 141,160 |
| Interest income – external | 10,840 | 3,546 | 2,567 |
| Income (loss) from equity method investments (Note 10) | 6,880 | 24,698 | (43,614) |
| Gains (losses) on securities | 28,571 | 25,109 | (54,174) |
| Other income (loss) | 804 | 5,625 | ( 5,205) |
| Foreign transaction gain (loss) | ( 3,922) | ( 3,065) | |
| 3,189 | |||
| Income before income taxes | 992,545 | 996,236 | 620,086 |
| Provision for income taxes (Note 12) | 259,415 | 235,566 | 169,574 |
| Net income | $ 733,130 | $ 760,670 | $ 450,512 |
| Net income | $ 7 33,130 | $ 7 60,670 | $ 4 50,512 |
| Other comprehensive (loss) income, net of tax: | |||
| Currency translation adjustments | (7,760) | 2,321 | 2,576 |
| Pension liability adjustments | 1,212 | (1,660) | 8,787 |
| Total other comprehensive (loss) income, net of tax | (6,548) | 661 | 1 1,363 |
| Comprehensive income | $ 7 26,582 | $ 7 61,331 | $ 4 61,875 |
| 4. Royalty Fee: | 5% of Gross Rooms Revenue "Gross Rooms Revenue" or "GRR" means the gross revenue and receipts of every kind attributable to or payable for rental of guest rooms/suites at the Hotel including, but not limited to, no-show revenue, early departure or late check-out fees, attrition or cancellation fees, any mandatory fee or surcharge charged to all or substantially all guests renting a room (including, but not limited to, resort fees, although inclusion of such fees or surcharges does not constitute approval by IHG of such fees and surcharges, which may be limited or prohibited); any awards, judgments or settlements representing payment for loss of room sales; and any other revenues allocable to rooms revenue under the Uniform System of Accounting for the Lodging Industry, Eleventh Revised Edition, 2014, as published by the American Hotel & Lodging Association Educational Institute, or any later edition, revision, or replacement that may be designated by IHG (the "Uniform System"). |
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, Gross Rooms Revenue (GRR) is defined as the gross revenue and receipts of every kind attributable to or payable for rental of guest rooms/suites at the Hotel. This includes no-show revenue, early departure or late check-out fees, attrition or cancellation fees, and any mandatory fee or surcharge charged to all or substantially all guests renting a room, including resort fees. The inclusion of resort fees does not constitute approval by IHG of such fees and surcharges, which may be limited or prohibited. GRR also includes any awards, judgments, or settlements representing payment for loss of room sales and any other revenues allocable to rooms revenue under the Uniform System of Accounting for the Lodging Industry, Eleventh Revised Edition, 2014, as published by the American Hotel & Lodging Association Educational Institute, or any later edition, revision, or replacement that may be designated by IHG.
Notably, Even Hotels does not allow deductions for charge backs, credit card service charges, commissions, uncollectible amounts, or similar items. Charges for items such as telephone charges, entertainment, the cost of any food and beverage items, room service, or other items provided to a guest as an incident of a guest room/suite rental are not considered deductions from Gross Rooms/Suites Revenue. However, Gross Rooms/Suites Revenue excludes sales tax, value-added tax, or similar taxes on such revenues and receipts.
For a prospective Even Hotels franchisee, understanding this definition is crucial because several fees, including the royalty fee and service contribution, are calculated as a percentage of Gross Rooms Revenue. The royalty fee is 5% of GRR, and the service contribution is 3.5% of GRR. Accurately calculating and reporting Gross Rooms Revenue is essential for compliance with the franchise agreement and to avoid potential disputes with IHG. Additionally, franchisees are expected to operate the hotel to maximize Gross Rooms Revenue, aligning their business practices with this goal.