Revenue Recognition

Overview

Revenue recognition determines when reservation income is recorded in your accounting. The recognition date affects:

• Which month revenue appears in reports
• Which owner statement includes the revenue
• How revenue is attributed across ownership periods

Choosing the right method depends on your accounting requirements and business needs.

Recognition Methods

Check-In

Revenue is recognized on the guest's arrival date.

Example:

Reservation: June 1-5 check-in/check-out
Booking date: May 15
Total rent: $400

Revenue recorded: June 1 = $400

Check-Out

Revenue is recognized on the guest's departure date.

Example:

Reservation: June 1-5 check-in/check-out
Booking date: May 15
Total rent: $400

Revenue recorded: June 5 = $400

Booked At

Revenue is recognized when the reservation is confirmed.

Example:

Reservation: June 1-5 check-in/check-out
Booking date: May 15
Total rent: $400

Revenue recorded: May 15 = $400

Pro-Rata

Revenue is spread evenly across each night of the stay.

Example:

Reservation: June 1-5 check-in/check-out (4 nights)
Total rent: $400

Revenue recorded:
- June 1: $100
- June 2: $100
- June 3: $100
- June 4: $100

Pro-Rata and Ownership Changes

Pro-rata recognition is essential when property ownership changes during a guest's stay:

Scenario: Property sold on July 1, reservation spans June 28 - July 3

June nights → Original owner's statement
July nights → New owner's statement

With pro-rata:
- June 28: $100 → Original owner
- June 29: $100 → Original owner
- June 30: $100 → Original owner
- July 1: $100 → New owner
- July 2: $100 → New owner

Without pro-rata (e.g., check-in), the entire $500 would go to the original owner, which is incorrect.

Fee Distribution

Recurring fees follow the same recognition pattern as the revenue they're calculated from. A 20% management fee on pro-rata revenue is also distributed pro-rata across the stay nights.

Configuration Levels

Revenue recognition can be set at multiple levels:

Custom Posting Dates

Individual charges can have explicit posting dates that override all recognition methods:

{
  "type": "rent",
  "amount": 50000,
  "generalLedgerPostingAt": "2024-06-15"
}

Canceled Reservations

When a reservation is canceled:

• Revenue entries are marked inactive
• Cancellation-related charges (if any) use the cancellation date
• Ensures canceled revenue doesn't appear in wrong periods

Deferred Revenue

When payment is received before revenue is recognized:

1. Payment received → Recorded as a liability (deferred revenue)
2. Recognition date arrives → Deferred revenue converts to actual revenue
3. Example: Guest pays May 15, checks in June 1 → Revenue recognized June 1

The system handles this automatically based on your recognition settings.

Choosing a Method

Recommendation: Pro-rata is the most accurate for property management but adds complexity. Use simpler methods if you don't have ownership changes or multi-month reservations.

Impact on Reports

API Endpoints

Revenue recognition is configured via:

• PUT /settings - Tenant-level default
• PUT /listings/{id} - Listing-level override
• Reservation and line item creation endpoints

Related Topics

• Reservations - Booking details and payment lines
• Listings - Property-level settings
• Owner Statements - Period-based reporting
• Ownership Periods - Revenue attribution
• Recurring Fees - Fee recognition follows revenue