{ "media_type": "text", "post_content": "When a hotel issues you points as a courtesy, do they pay for it out of their income statement? How does that work?", "post_id": "5e1b70aca3176c00216e4687", "reply_count": 6, "vote_count": 5, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting" }

When a hotel issues you points as a courtesy, do they pay for it out of their income statement? How does that work?

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Not an accountant, but points are a debt obligation, revenue tied to points has to be at least partially deferred to cover debt obligation. Amount of liability is a formula related to value of points and amount of points that go in redeemed. So when they grant points they are increasing a liability and increasing amount of revenue that will need to be deferred to cover that liability.

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Yes. Hotels pay for points issued by them (elite credit, compensation for issues, etc.) Central Programs pay for program initiatives (things like elite bonus, promotions, call center complaints). Cost to hotels is based on a central balance and actuarial valuation on cost to reimburse hotels for point redemptions. For for 10pt/$1 programs, the typical charge is ~$5/1k pts. 5pt/$1 programs, ~$10/1k.

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yes, it does

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Yes at a much lesser valuation. Something like 0.04 cpp.

Assuming it creates a liability or contra-asset. Probably some sort of allowance similar to a warranty.

And the franchises pay corporate for the points they issue Can you confirm IHG1?

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