What items are adjusted to exclude from The Standardx's Adjusted EBITDA calculation?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
We define Adjusted EBITDA as net income (loss) attributable to Hyatt Hotels Corporation plus net income (loss) attributable to noncontrolling interests and our pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA, primarily based on our ownership percentage of each owned and leased venture, adjusted to exclude amortization of management and hotel services agreement and franchise agreement assets ("key money assets") and performance cure payments, which constitute payments to customers ("Contra revenue"); revenues for reimbursed costs; stock-based compensation expense; transaction and integration costs; depreciation and amortization; reimbursed costs that we intend to recover over the long term; equity earnings (losses) from unconsolidated hospitality ventures; interest expense; gains (losses) on sales of real estate and other; asset impairments; other income (loss), net; and benefit (provision) for income taxes.
Adjusted general and administrative expenses exclude the impact of deferred compensation plans funded through rabbi trusts and stockbased compensation expense. Adjusted general and administrative expenses assist us in comparing our performance over various reporting periods on a consistent basis because it removes from our operating results the impact of items that do not reflect our core operations, both on a segment and consolidated basis.
Source: Item 1 — Financial Statements. (FDD pages 156–187)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, Adjusted EBITDA is calculated by starting with net income (loss) attributable to Hyatt Hotels Corporation, adding net income (loss) attributable to noncontrolling interests, and The Standardx's pro rata share of unconsolidated owned and leased hospitality ventures' Adjusted EBITDA. This is primarily based on the ownership percentage of each owned and leased venture. Several items are then adjusted to exclude them from the calculation.
The specific exclusions from Adjusted EBITDA include amortization of management and hotel services agreement and franchise agreement assets (referred to as "key money assets"), performance cure payments (also known as "Contra revenue"), revenues for reimbursed costs, stock-based compensation expense, transaction and integration costs, depreciation and amortization, and reimbursed costs that The Standardx intends to recover over the long term. Additionally, equity earnings (losses) from unconsolidated hospitality ventures, interest expense, gains (losses) on sales of real estate and other assets, asset impairments, other income (loss), net, and benefit (provision) for income taxes are also excluded from the Adjusted EBITDA calculation.
For a prospective franchisee, understanding these adjustments is crucial because Adjusted EBITDA is a key metric used by The Standardx to evaluate the performance of its segments. By excluding these items, The Standardx aims to provide a clearer picture of the core operational profitability of its various business segments. This allows the company to assess trends, compare performance against prior periods and forecasts, and make informed decisions about resource allocation. Franchisees should be aware of how these adjustments might impact their own financial performance metrics and how The Standardx uses these metrics to evaluate their operations.
It is important to note that during the year ended December 31, 2024, The Standardx revised its definition of Adjusted EBITDA to exclude transaction and integration costs, recasting prior-period results for comparability. This change reflects a move towards presenting a more representative measure of core operations and improving the comparability of results, which aligns with how management evaluates operating performance. Franchisees should stay informed about any further changes to these definitions and their potential impact on financial reporting and performance evaluations.