To accurately track commissions versus value-adds for guests, and accurately report room revenue numbers, code our Guest Rewards Rebate as Contra Revenue.
- According to the latest accounting standards, rebates to the contracting party - in this case the guest - should be deducted from revenue even when facilitated with the help of a third party (The Guestbook).
- Please see the two related documents from USALI and STR (linked below) for more information on accounting for rebates, and please note that the guidance on Group Rebates also applies to guest rebates even though they are not specifically addressed
USALI Clarification - Rebate Accounting
STR Data Reporting Guidelines - Rebates
FAQs:
Q: How should I code the invoice line items on my P&L?
A: With the possible exception of some non-USA hotels, the guest rebate/cash back portion should be added to a rooms contra revenue account, which deducts the amount from your rooms revenue (similar to a discount or allowance of the same amount). The remaining commission line items should be coded to the rooms commissions expense line in aggregate or individually depending on hotel preference.
Q: Should I deduct the cash back rebates from revenue daily or monthly?
A: You may record the entire rebate for the month on the last day of the month. For example, when you receive an invoice on May 1st (invoice date of April 30th), you can apply the rebate to April 30th. The value of the rebate for the month should still be relatively immaterial compared to even one day of revenue. The example would be as follows:
-
- Rooms Revenue on 4/30/20: $25,000
- Rooms Contra Revenue on 4/30/18: -$1,000 (5% rebate associated with member stays 3/25 – 4/25)
- Net Rooms Revenue on 4/30/20: $24,000
- Rooms Revenue reported to Smith Travel or similar for 4/30/20: $24,000
Q: What do I do if I have stays with checkout dates from prior months on my invoice?
A: Due to the timing of processing and other considerations, a minority of stays on the invoice will be from prior months. However, the carryover should still be relatively similar from month to month and will therefore be relatively accurate if expensed as invoiced for the month.