What services does The Standardx provide under the terms of management and hotel services agreements?
The_Standardx Franchise · 2025 FDDAnswer from 2025 FDD Document
hotel services, which form a single performance obligation that qualifies as a series. In exchange, we receive variable consideration in the form of management or hotel services fees which are comprised of base and/or incentive management fees. Incentive fees are typically subject to the achievement of certain profitability targets, and therefore, we apply judgment in determining the amount of incentive management fees recognized each period. Incentive management fees are recognized to the extent it is probable that we will not reverse a significant portion of the fees in a subsequent period. We rely on internal financial forecasts and historical trends to estimate the amount of incentive management fees recognized and the probability that incentive fees will reverse in the future. Generally, base management and hotel services fees are due and payable on a monthly basis as services are provided, and incentive fees are due and payable based on the terms of the agreement, but at a minimum, incentive fees are billed and collected annually. Revenues are recognized over time as services are rendered.
Under the terms of certain management agreements, primarily within the U.S., we are the employer of hotel employees. When we are the employer, we are reimbursed for costs incurred related to the employee management services with no added margin, and the reimbursements are recognized over time as services are rendered in revenues for reimbursed costs on our consolidated statements of income. In jurisdictions in which we are the employer, we have discretion over how employee management services are provided, and therefore, we are the principal.
• Loyalty program administration—We administer the loyalty program for the benefit of Hyatt's portfolio of properties during the period of their participation in the loyalty program. Under the program, members earn points based on their spend at our properties and through our experience platform; by transacting with our strategic loyalty alliances, including American Airlines and Peloton; or in connection with spend on the World of Hyatt cobranded consumer and business credit cards. Loyalty program points can be redeemed for the right to stay at participating properties, as well as for other goods and services from third parties. Points earned by loyalty program members represent a material right to free or discounted goods or services in the future.
The loyalty program has one performance obligation that consists of marketing and managing the program and arranging for award redemptions by members.
Source: Item 23 — Receipts (FDD pages 85–132)
What This Means (2025 FDD)
According to The Standardx's 2025 Franchise Disclosure Document, under the terms of its management and hotel services agreements, The Standardx provides management and hotel services. These services are considered a single performance obligation that qualifies as a series. In exchange for these services, The Standardx receives variable consideration in the form of management or hotel services fees, which include base and/or incentive management fees. Incentive fees are typically dependent on achieving certain profitability targets. The Standardx uses internal financial forecasts and historical trends to estimate the amount of incentive management fees and the probability that these fees might be reversed in the future. Base management and hotel services fees are generally due and payable monthly as services are provided, while incentive fees are due and payable based on the agreement terms, but at least annually. Revenues are recognized over time as the services are rendered.
In some management agreements, primarily in the U.S., The Standardx acts as the employer of hotel employees. When The Standardx is the employer, it is reimbursed for the costs incurred related to employee management services without any added margin. These reimbursements are recognized over time as the services are rendered. The Standardx has discretion over how these employee management services are provided and is therefore considered the principal in these arrangements.
Additionally, The Standardx provides access to its intellectual property, including the Hyatt brand names and systems, in exchange for sales-based fees from hotel owners. These fees are generally payable monthly as the owners benefit from the IP. The promise to provide system-wide services is combined with access to The Standardx's IP to form a single performance obligation. Revenues and operating profits of the hotels are used to measure the progress in satisfying the performance obligations under the management and hotel services agreements.