When creating your Reservation commission to generate Owners Statements in Hospitable, hosts can choose how to recognize their revenue.
Revenue recognition options
There are 3 ways to recognize revenue. You can recognize all of your revenue in the same way, or pick and choose how each individual item is recognized.
Prorated
Prorated revenue recognition takes the sum of the financial items and divides them by the nights stayed. Revenue is recognized each night, which means that the revenue for reservations that happen across multiple months will be recognized in each night stayed.
This is the recommended recognition option for Commission. It ensures that you as a manager are paid for the work you performed that month, and owners are not charged an overwhelming amount up front for longer reservations.
The amount recognized each night is taken by dividing the total amount that you charge commission from by the nights stayed in the reservation. The pricing of individual nights is not taken into consideration, but rather averaged across the entire stay.
For example, if you charge commission on the accommodation after discounts and a reservation has one night in January that was $200 and another in February that was $100, the total accommodation is $300 so the amount recognized in January is $150 and the amount recognized in February is $150.
Check-in
Recognizing revenue on check-in is a simple approach that means that every reservation with a check-in during a calendar month will be fully recognized on the month of check-in. Revenue from a 15-day reservation that checks in on January 31 would be fully recognized in January, and not mentioned in February.
Checkout
Recognizing revenue on checkout is a simple approach that means that ever reservation with a checkout during a calendar month will be fully recognized on the month of checkout. Revenue from a reservation checking in on January 5th and checking out on February 1 would be fully recognized in February, and not mentioned in January.
Reservation commission items that support advanced revenue recognition options
The reservation commission is made up of multiple parts: Commission, Reservation fees, Flat fees and Pass-through taxes.
Commission recognition
The Commission revenue can be recognized prorated, or by check-in or checkout.
Reservation fee revenue recognition
The Reservation fee revenue can be recognized as a whole, or by the individual financial item. If you choose to customize how revenue from reservation fees are recognized, you will select the desired option for each reservation fee.
Flat fees
At this time, flat fees are recognized in full on check-in, without an option to further customize.
Pass-through taxes
At this time, pass-through taxes are recognized in full on check-in, without an option to further customize.