What is the impact of changes in cardholder spending habits on The Standardx's revenue recognition?

According to The Standardx's 2025 Franchise Disclosure Document, cardholder spending habits directly influence revenue recognition through co-branded credit card programs. The Standardx recognizes revenue from these programs based on the license to use the Hyatt name, as the amount of cardholder spending indicates the value that the partner (credit card company) derives from The Standardx's brand. Therefore, an increase in cardholder spending would likely lead to an increase in recognized revenue for The Standardx, and vice versa. This is because the revenue is tied to the perceived value of The Standardx's brand as reflected in card usage.

Specifically, The Standardx has various performance obligations within these co-branded agreements, including licensing the Hyatt name, arranging for the fulfillment of loyalty points, and awarding free room nights when cardholders reach certain milestones. The loyalty points and free room nights are considered material rights that can be redeemed for future services. The more cardholders spend, the more points are issued and potentially redeemed, impacting how The Standardx recognizes revenue related to these obligations.

Changes in spending habits also affect the estimates of "breakage" for loyalty points, which refers to points that are not expected to be redeemed. The Standardx uses third-party actuaries to estimate redemption ratios and the amount of revenue recognized upon redemption. If cardholder spending decreases, the estimated redemption rates might change, affecting the amount of revenue recognized. Conversely, increased spending could lead to higher redemption rates and adjustments to revenue recognition. Therefore, monitoring and accurately predicting cardholder spending habits are crucial for The Standardx to properly account for revenue from its co-branded credit card programs.