What does 'Net rooms revenue' refer to for Sonesta Simply Suites Brand Hotels?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
"Net rooms revenue" refers to Gross Rooms Revenue net of timely cancellations.
"Gross Rooms Revenue" means all revenue attributable to or payable for rental of Guest Rooms at a Brand 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 the Brand 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 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 70–74)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, 'Net rooms revenue' is defined as the 'Gross Rooms Revenue' after subtracting revenue lost due to timely cancellations.
'Gross Rooms Revenue' encompasses all revenue derived from guest room rentals, irrespective of the payment method (cash, credit, debit, barter, etc.) or whether the revenue has been collected. It includes guaranteed no-show revenue and revenue from reservations canceled outside the hotel's or channel's cancellation policy. It also factors in proceeds from business interruption insurance related to guest room unavailability and miscellaneous fees charged to all guests. However, it excludes charges for food and beverage, vending machine receipts, telephone charges, key forfeitures, entertainment (including internet fees and commissions), allowances for guest room rebates and overcharges, gratuities, and applicable taxes.
For a prospective Sonesta Simply Suites franchisee, understanding this definition is crucial because 'Net rooms revenue' is a key component in calculating various performance metrics presented in Item 19 of the FDD, such as ADR (Average Daily Rate), Occupancy, RevPAR (Revenue Per Available Room), and Contribution. These metrics are used to evaluate the financial performance of both company-owned and franchised Sonesta Simply Suites hotels. By understanding what constitutes 'Net rooms revenue', a franchisee can better interpret the financial performance representations and assess the potential profitability of a Sonesta Simply Suites franchise.