What is the definition of 'Gross Rooms Revenue' for a Sonesta Simply Suites franchise?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
- Definition of "Gross Rooms Revenue." As used in this Agreement, the term "Gross Rooms Revenue" means all revenue attributable to or payable for rental of Guest Rooms at your Hotel, whether from cash, check, credit and debit card, barter exchange, trade credit, or other credit transactions, whether or not collected, including guaranteed no-show revenue, revenue calculated on reservations cancelled outside of your Hotel's cancellation policy or outside of the reservation channel in which it was made, any proceeds actually received from any business interruption or similar insurance applicable to the loss of revenue due to the non-availability of Guest Rooms, and any miscellaneous fees charged to all guests regardless of the accounting treatment of such fees, net of chargebacks from credit card issuers.
Excluded from Gross Rooms Revenue are separate charges to guests for food and beverage (including room service); vending machine receipts; actual telephone charges for calls made from a guest room; key forfeitures and entertainment (including Internet fees and commissions); allowances for any Guest Room rebates and overcharges; gratuities to employees or service charges levied in lieu of such gratuities, which are payable to employees; and applicable federal, state and local sales, occupancy and use taxes collected from guests.
Source: Item 22 — CONTRACTS (FDD pages 79–80)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, Gross Rooms Revenue is defined as all revenue attributable to the rental of guest rooms at the hotel. This includes revenue from cash, check, credit and debit card, barter exchange, trade credit, or other credit transactions, whether or not collected. It also encompasses guaranteed no-show revenue, revenue from reservations cancelled outside the hotel's cancellation policy or the reservation channel in which it was made, proceeds from business interruption insurance related to the loss of revenue due to the non-availability of guest rooms, and any miscellaneous fees charged to all guests, regardless of accounting treatment, net of chargebacks from credit card issuers.
However, the definition of Gross Rooms Revenue for a Sonesta Simply Suites franchise specifically excludes certain charges. These exclusions include separate charges to guests for food and beverage (including room service), vending machine receipts, actual telephone charges for calls made from a guest room, key forfeitures and entertainment (including Internet fees and commissions), allowances for guest room rebates and overcharges, gratuities to employees or service charges levied in lieu of such gratuities which are payable to employees, and applicable federal, state and local sales, occupancy and use taxes collected from guests.
Understanding what constitutes Gross Rooms Revenue is crucial for a Sonesta Simply Suites franchisee because it directly impacts the calculation of royalty fees and the brand promotion fee. These fees are calculated as a percentage of Gross Rooms Revenue, meaning that a clear understanding of what is included and excluded is essential for accurate financial reporting and payment to the franchisor. For instance, the brand promotion fee is currently 3.5% of Gross Rooms Revenue but can be increased to a maximum of 4.5% with notice from Sonesta Simply Suites.