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Reporting Rooms Revenue | Additional Rooms Revenue Allocation/Reporting Notes | Reporting Rooms Sold | Reporting Rooms Available | Segmentation Program Definitions | Additional Revenue Segmentation

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Reporting Rooms Revenue

Only revenue generated from guestroom rental should be included in Rooms Revenue figures reported to STR.

Revenue produced from food and beverage or other sources, including the “non-room revenue” components of package rates, should be excluded from Rooms Revenue reported to STR. Rooms Revenue reported to STR should be net of rebates, refunds, allowances, overcharges and taxes. Specifics of what should be included and excluded from Rooms Revenue reported to STR are provided below.

STR tracks Food and Beverage and Other Revenue for hotels participating in the STR Segmentation program (see Segmentation Definitions).

Include:

Exclude:

No-shows” Revenue derived from a transient or group guest who has individually guaranteed payment to reserve a room but has failed to either cancel the reservation prior to arrival or occupy the room. No-show rooms are not counted as rooms sold. Note, executing the Guaranteed No Show (GNS) policy can be discretionary and based on goodwill or guest loyalty. Enforcement of the GNS policy generally is due to the hotel’s/ asset’s limited ability to resell the guaranteed room in a non-existent “booking window.” For clarity, revenue from group attrition (cancellation) and transient guestroom cancellations after the cutoff/penalty date and before arrival is included in Attrition Fees and Cancellation Fees within Miscellaneous Income (Schedule 4) and not Rooms Revenue or Other Rooms Revenue. Surcharges and service charges (property acting as principal) These charges generally include any mandatory, customary, non-discretionary or other charges automatically added to a customer account in respect of the service or use of an amenity in which a customer has no discretion or the ability to “opt-out” (particularly common in the Middle East and Asia Pacific regions).1 These charges typically include a compulsory service charge or a guest room cleaning charge. Charges are mandatory and not required to be passed through to a 3rd party (e.g. employee or government agency).2 For reporting and benchmarking consistency, the entire service charge amount in the respective currency should be included in Rooms Revenue reported to STR. Partial day and “day use” revenue See Additional Room Revenues for treatment and allocation guidance. Pet or smoking rooms Reported as any other “room type” (beach/scenic view, suite, high floor, concierge level/floor). Note, pet or smoking fees charged as a penalty, cleaning, or damages are reported in Miscellaneous Income (Schedule 4). See Exclude from Rooms Revenue Figures- Pet or Smoking Fees. Early/late departure fees Rollaway bed/Crib rental     1 See Uniform System Accounts for the Lodging Industry; page 12. 2 See Uniform System of Accounts for the Lodging Industry; pp. 351-352.

Resort Fees Resort Fees are not part of Rooms Revenue service charges and are not to be included in Rooms/Other Rooms Revenue figures reported to STR. Resort Fees must be included in Miscellaneous Income (Schedule 4). Commissions and Fees - Group When the contracting party directly receives a rebate/commission as a result of the contract with the hotel, where the analysis of gross versus net reporting would indicate net reporting, the hotel should record the rebate/commission as a contra revenue (a reduction of revenue). See Gross versus Net, USALI Part V page 340. When as a result of contractual arrangement, the hotel (the obligator) must make a payment to a non-related third party, where the analysis of gross versus net reporting would indicate gross reporting, the payment would be recorded as part of Commissions and Fees – Group expense. See Gross versus Net, USALI Part V page 340. Product or service-related refunds Refunds due to product or service related issues are a reduction to Rooms Revenue. Group attrition (cancellation) and transient guest cancellation Fees received due to cancellations (generally advance deposits for meetings, conventions, groups, guest sleeping room blocks, etc.) should be excluded from Rooms Revenue reported to STR. For clarity, revenue from group attrition (cancellation) and transient guest cancellation after the cutoff date are included in Attrition Fees and Cancellation Fees within Miscellaneous Income (Schedule 4) and not Rooms Revenue or Other Rooms Revenue. Food and Beverage and ancillary fees Included in package rates or at all-inclusive hotels (e.g. parking, transportation, internet or golf/spa). Pet or smoking fees Charged as a penalty, cleaning, or damages are reported in Miscellaneous Income (Schedule 4). Surcharges, Service Charges, Gratuities (property acting as an agent). Charged as a penalty, cleaning, or damages are reported in Miscellaneous Income (Schedule 4). Gratuities A gratuity is generally a discretionary amount added to an account or left directly with an employee by the customer. Gratuities are generally retained by the employee at the time of the transaction in the case of cash or disbursed by the employer as trustee for the employees in the case of charged gratuities. A gratuity is not income to the property. It is treated as income directly in the hands of the employee. Taxes and Government mandated surcharges

Additional Rooms Revenue allocation/reporting notes

Regarding including or excluding service charges when reporting rooms/other revenue:

When acting as a principal, the full amount of services charges are only to be included in revenue if:

1) The fees/charges are mandatory, customary, non-discretionary and automatically added to a customer account and the customer has no discretion or the ability to “opt-out”, and

2) The hotel is able to collect the charges for its own benefit (i.e. it is not required to pass-through the collected charges onto a 3rd party).

When acting as an agent services charges are excluded from rooms/other revenue.

Wholesalers, eChannel, online travel agencies (OTAs) and/or internet rates

Net (not gross) Rooms Revenue from wholesale and “pay when booked” internet rates should be reported to STR.

Gross (not net) Rooms Revenue should be reported to STR for “pay later” internet rates, similar to traditional travel agencies. Commissions on these gross revenues are recorded as an expense to the rooms department.

Package rates

Only the room revenue portion of package rates should be reported to STR. To identify the room revenue component in package rates, the Fair Market Value (FMV) of each package item should be determined. The FMV room revenue percentage should then be applied to the package rate to determine the Rooms Revenue figure reported to STR.

Loyalty program redemptions and rewards

The conservative average of prevailing rates for similar accommodations in the hotel or as set forth by rate standards established by brand/chain.

Two best practices options exist for recording loyalty redemption or rewards:
1) Only record redemption/reward revenue in the month end total (e.g. January monthly total).

2) Care should be given when reporting weekly and daily redemption/reward revenue. Revenue should not be reported on one day of the week but spread/allocated over each day of the week (i.e. day 1-7).

Marketing Promotions

Rooms revenue generated from “buy two nights, get one free” and similar marketing promotions should be spread evenly over the nights generated by the promotion.

Partial day and “day use” revenue

This is revenue derived from sources such as rooms used for hospitality suites, dressing rooms, employment interviews, movie auditions, and wholesale distributors (for example, clothing, toys, other merchandise). No Food and Beverage services should be included.

Day use rooms are sold on the basis that they will not be used overnight and are not charged a rate applicable to any segment under which the hotel offers rates (Ex: Transient, Group or Contract). Rooms that are sold into a specific rate category should be coded to the applicable segment and reported as rooms sold, not reported as Day Use.

As an example, if you have airline crew rooms which check-in at 7 a.m. and check-out at 5 p.m., they should be coded to the Contract rooms segment, not Day Use. If these crew rooms are resold on the same day, it is possible for the hotel in question to exceed 100% occupancy.

If a guest occupies a room during the day and checks out before 6 p.m., regardless of the intended use of the room and that guest receives a rate which is not a published or negotiated rate, then the room should be recorded as a Day Use room.

Reporting Rooms Sold

Only revenue generating guestrooms should be reported to STR as rooms sold. Complimentary rooms should be excluded in the rooms sold figures. Specifics of what should be included and excluded from rooms sold reported to STR are provided below:

Include in Rooms Sold Figures:

Exclude in Rooms Sold Figures:

Revenue generating rooms sold Partial day and “day use” rooms sold This is revenue derived from sources such as rooms used for hospitality suites, dressing rooms, employment interviews, movie auditions, and wholesale distributors (for example, clothing, toys, other merchandise). No Food and Beverage services should be included. Day use rooms are sold on the basis that they will not be used overnight and are not charged a rate applicable to any segment under which the hotel offers rates (Ex: Transient, Group or Contract). Rooms that are sold into a specific rate category should be coded to the applicable segment and reported as rooms sold, not reported as Day Use. As an example, if you have airline crew rooms which check-in at 7 a.m. and check-out at 5 p.m., they should be coded to the Contract rooms segment, not Day Use. If these crew rooms are resold on the same day, it is possible for the hotel in question to exceed 100% occupancy. If a guest occupies a room during the day and checks out before 6 p.m., regardless of the intended use of the room and that guest receives a rate which is not a published or negotiated rate, then the room should be recorded as a Day Use room. Rooms occupied without charge in connection with a promotion or contract (e.g. stay two nights, get one free; book a 50 room group, get one room free).

Complimentary rooms not associated with a promotion or contract Not associated with a promotion or contract (e.g. gratis rooms provided to employees, owners and familiarization tours). “No-shows” No room nights sold are to be recorded for a no-show. Owner occupied condominiums Owner occupied rooms should be treated as complimentary rooms.

Reporting Rooms Available

Full room night availability (i.e. number of rooms at the property multiplied by the days in the period) must be reported for each hotel

There should be NO adjustment in room availability reported to STR if rooms are temporarily out of service for renovation for a period of less than six months. If rooms are permanently removed from inventory, hotel management should contact STR to adjust the hotel’s room count.

Additionally, if rooms are closed for an extended period of time (typically over six months), “Extended Closed Rooms”, due to renovation, natural or man-made disaster (hurricane, earthquake, fire, oil spill, pandemic, etc.) please notify STR for proper handling of a room inventory reduction.

If a property removes ALL rooms from inventory for renovation (complete closure), for a period of more than one calendar month, STR should be notified so that the property may be marked as "Temporary Closed"/“Renovation Closed”. Hotels marked as "Temporary Closed"/“Renovation Closed” assume closed status, have no available inventory during the renovation period, and therefore no impact on the performance of competitive sets or industry segments.

Seasonally Closed Rooms

When all operations of a hotel are closed for a minimum of 30 consecutive days due to seasonal demand patterns, then the rooms for this period should be removed from the annual saleable inventory. The hotel must be seasonally closed consistently at the same time each year. STR should be notified so that the propertymay be identified as “Seasonally Closed” for the applicable period.

Mixed-ownership properties (i.e. hotels including
timeshare/condo inventory)

Properties of all types are building or converting rooms into residential units creating “mixed-ownership” entities. These facilities may be timeshare, strata, fractional use or whole ownership. STR does not fluctuate availability for rooms that come in and out of the owner rental pool, with the goal to provide consistency of reported rooms available within competitive sets and industry reported data. To accommodate these scenarios we guide the property/asset to report the prevailing average number of rooms that are part of hotel’s rentable inventory for the year.

For example: a 300-rooms property with 100 condo units and 200 rooms are traditional hotel rooms has 50 condo units as the prevailing yearly average of condo units available for rent as traditional hotel rooms. Therefore, the rooms available in STR’s census database for this property is set at 250 rooms.

Merely operating these mixed-ownership properties as a lodging operation does not in and of itself qualify the revenue stream to be recorded in the Rooms department. Consideration should be given to the facts and circumstances of each project.

The first step in identifying the revenue treatment of the mixed ownership property is to determine if the reporting should be gross or net (see Part V, USALI). When working through the criteria for gross versus net, weight should be given to which party incurs the predominant economic loss if the renter fails to pay. Once the revenue treatment is determined, there are three scenarios for inclusion in the Statements of Income outlined in USALI. The scenario provided below details when and how data should be reported to STR.

Property assumes the predominant economic risk
long term (Scenario 1)

The property enters into an agreement with the third-party unit owner that extends one year or beyond and the units are included in the hotel room inventory for the full year. Under the terms of the agreement, the property assumes the economic risk associated with operating the third-party-owned units pursuant to the contractual relationship.

The associated revenue stream is recorded in the Rooms department with the Transient, Group, Contract and Other Revenue categories, and the units are considered available rooms in the property room inventory. Where the contract permits the unit owner a limited number of nights in the unit, the unit would remain in the available room pool and would be recorded as a complimentary room when the owner is occupying the unit.

Should Scenario 1 not be applicable to the property, please take note of the following two additional scenarios and their handling of the data reported to STR:

Property assumes the predominant economic risk short term (Scenario 2)

The property enters into an agreement with the third-party unit owner, whereby the unit owner places the unit into a rental program during part, but not all, of the year. Under the terms of the agreement, the property assumes the predominant economic risk associated with operating the third-party-owned units pursuant to the contractual relationship. For example, the property is responsible to reimburse or pay a rental/use fee to the third-party unit owner each time the unit is rented, even if the revenue is not collected by the property.

The associated revenue stream is recorded in the Other Operated Departments section of the Summary Operating Statement. The property may choose to track the revenue and statistics as Transient, Group, Contract, and Other revenue within the Other Operated Department.However, due to the temporary nature of the room availability, such rooms are not considered property room inventory and are not included in room occupancy, ADR, and RevPAR statistics.Rental payments, either fixed or a percentage of net revenue, to third-party owners due under the contractual agreement would be a Rent expense on Non-Operating Income and Expenses—Schedule 11. Labor costs and related expenses and operating expenses incurred by the property to rent and service the units would be recorded in the expenses of the Other Operated Department.

Third-party unit owner assumes the predominant economic risk (Scenario 3)

The third-party owner assumes the predominant economic risk for renting the unit and reimburses the property for all expenses incurred by the property. The net revenue received by the property as an agent is the commission revenue on the rental. The recovery of any operating expenses or common area maintenance (“CAM”) reimbursements are considered revenue received by the property and is recorded in Minor Operated Departments—Schedule 3-xxif the property earns a profit for providing the services, or Non-Operating Income and Expenses—Schedule 11 if the property recovers the expenses without a profit. Examples of reimbursements would be maintenance/cleaning fees for the room rental, reservations charges, and administrative fees associated with the rental of the unit. Labor costs and related expenses and operating expenses incurred by the property to rent and service the units would be recorded in the expenses of the Minor Operated Department or on Non-Operating Income and Expenses—Schedule 11, depending upon where the revenue is recorded as noted above.

Average rate and occupancy statistics are affected depending upon the facts and circumstances. If the relationship between property and owner qualifies for inclusion in the Rooms department (Scenario 1 above), then it is appropriate to record the available and occupied third-party-owned units in the total rooms available and total occupied rooms statistics of the property. Failing to meet the criteria set forth with respect to inclusion of such rental revenue in the Rooms department warrants the exclusion of the third-party-owned units from the Rooms department operating statistics. Instead, such statistics are recorded on a supplemental basis as discussed in Part III.

As indicated in the three scenarios above, under certain circumstances, mixed ownership revenue in its entirety may be reported on a net basis within Miscellaneous Income—Schedule 4 and in other circumstances may be reported on a gross basis in the Rooms department or Other Operated Departments. For additional information, see Part V.

Segmentation Program Definitions

Additional Revenue Segmentation