What is the relationship between the value transferred to the customer and the revenue recognized by The Standardx?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
For each performance obligation satisfied over time, we recognize revenues using an output method based on the value transferred to the customer. Revenues are recognized based on the transaction price and the observable outputs related to each performance obligation. We deem the following to represent our progress in satisfying these performance obligations:
- revenues and operating profits earned by the hotels during the reporting period for access to Hyatt's IP as it is indicative of the value third-party owners and franchisees derive;
- revenues and operating profits of the hotels for the promise to provide services to the hotels under management and hotel services agreements;
- award night redemptions or point redemptions with third-party partners for the administration of the loyalty program performance obligation; and
- cardholder spend for the license to the Hyatt name through our co-branded credit card programs as it is indicative of the value our partner derives from the use of our name.
Within our management and hotel services agreements, we have two performance obligations: providing access to Hyatt's IP and providing management and hotel services. Although these constitute two separate performance obligations, both obligations represent services that are satisfied over time, and we recognize revenues using an output method based on the performance of the hotel. Therefore, we have not allocated the transaction price between these two performance obligations as the allocation would result in the same pattern of revenue recognition.
Source: Item 23 — Receipts (FDD pages 85–132)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, the company recognizes revenues based on the value transferred to the customer. For each performance obligation satisfied over time, The Standardx recognizes revenues using an output method that directly correlates with the value provided to the customer. This means that the revenue recognized is based on the transaction price and observable outputs related to each performance obligation.
For hotel services, The Standardx deems revenues and operating profits earned by the hotels during the reporting period for access to Hyatt's IP as indicative of the value third-party owners and franchisees derive. Similarly, revenues and operating profits of the hotels for the promise to provide services to the hotels under management and hotel services agreements are considered. For loyalty programs, award night redemptions or point redemptions with third-party partners are indicative of progress in satisfying the loyalty program performance obligation. For co-branded credit card programs, cardholder spend for the license to The Standardx name is indicative of the value the partner derives from the use of the name.
Within management and hotel services agreements, The Standardx identifies two performance obligations: providing access to The Standardx's IP and providing management and hotel services. Although these are separate, The Standardx does not allocate the transaction price between them because both represent services satisfied over time, and the allocation would result in the same pattern of revenue recognition. This approach simplifies the accounting process while accurately reflecting the value delivered to the customer over time.