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Concepts Overview
The creation of “Net Revenues” – Promotional Allowance method Revenues 2009
2008
Casino
$4,000 $3,500
Rooms
500
450
Inclusive of comp revenue
F & B
500
450
Other
200
175
Gross Revenues
5,200
4,575
Less: Promotional Allowance
585
415
Net Revenues
4,615
4,160
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Promo Allowance
• Value of the comp varies based on each operation’s internal consideration – i.e. retail etc. More specifically, this includes estimating the costs of providing a complimentary room (i.e. cost to turn the room), food or beverage (retail value) and recording the comp expense. • Generally accounted for as comp expense or promotional allowance in the department giving the comp, unless SEC a registrant (covered later). • The value of promotional allowances is included as revenue in the department which provides goods or services for the comp, with the corresponding expense to the department that is providing the comp. • Comps show, from a departmental financial perspective, revenue in the “selling” department and expense to the department giving the comp, i.e. – hotel room comped to a slot patron. In most cases, this would be the casino department. • Recording the comp revenue helps the providing department’s cost of sales ratios from being skewed.
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