IFRS vs US GAAP for Hotels, Travel Agents and Tour Operators

IFRS vs US GAAP for Hotels, Travel Agents and Tour Operators

You may also be interested in our USALI vs US GAAP: A Guide for Hotels and Accountants and our USALI 12th edition article

Global travel businesses increasingly operate across multiple jurisdictions, bringing a mix of statutory requirements, owner expectations, international investors, and tax constraints. This makes financial reporting frameworks more than technical choices. For hotels, travel agents and tour operators, the difference between IFRS and US GAAP influences reported profit, valuation, bank covenants, depreciation patterns, asset values, bonus calculations, tax exposures, and even system design.

IFRS has traditionally dominated outside the United States. US GAAP continues to govern US public companies and most private entities reporting to US lenders. However, the travel sector’s global nature forces companies into dual reporting, especially large hotel groups, gaming companies, and international tour operators. This comparison looks at the core issues that matter to tourism businesses.

1. The Context: Why IFRS vs US GAAP Matters for Travel and Hospitality

Tourism, hospitality and leisure companies typically operate across borders, deal with diverse regulatory regimes and manage complex assets, loyalty programmes, leases, and joint ventures. Deloitte summarises this industry complexity clearly: Tourism companies face a variety of rules and regulations, tax jurisdictions, building and occupancy codes, lease and tenant issues, finance and accounting concerns across global markets By 2025, most large hotel groups, global tour operators and online travel agents are working in a world where:

• IFRS is the dominant framework outside the United States.

• US GAAP remains mandatory for US domestic SEC filers.

• Both frameworks have converged on modern standards for revenue and leases, but still diverge in areas like revaluation of property, impairment mechanics, and some lease and tax details.

For any group with a mix of US and non-US entities, or for investors comparing global hotel and travel brands, these differences still matter. They affect:

• Reported EBITDA and net income.

• Debt covenants, leverage ratios, and interest cover.

• How quickly impairments are recognised in a downturn.

• KPIs that management and owners rely on, for example RevPAR, EBITDAR, and cash generation.

The real dividing lines in 2025 are:

• IFRS 15 vs ASC 606 for revenue.

• IFRS 16 vs ASC 842 for leases.

• IAS 16 / IAS 36 vs ASC 360 / ASC 350 for fixed assets and impairment.

• IAS 12 vs ASC 740 for tax, built on those pre-tax differences.

2. Big picture: convergence and the remaining gaps

2.1 Areas that are now broadly aligned

Revenue recognition

IFRS 15 and ASC 606 share the same five-step model to recognise revenue from contracts with customers, including guidance on:

• Performance obligations.

• Transaction price and variable consideration.

• Principal vs agent.

• Contract costs.

This means that for hotel packages, travel agent commissions, tour operator multi-day trips and loyalty points, the conceptual model is now very similar under both frameworks.

Leases – bringing leases on balance sheet

IFRS 16 and ASC 842 both require lessees to recognise:

• A right-of-use (ROU) asset.

• A lease liability for most leases.

For hotel groups with large portfolios of leased properties and for travel agencies with office and IT leases, this ended the old off-balance sheet operating lease model.

Principal vs agent

IFRS 15 and ASC 606 are explicitly converged on principal vs agent, including how agents recognise only their fee and principals recognise gross revenue. This is crucial for online travel agencies (OTAs), bedbanks, host agencies, franchise models and DMC structures.

2.2 Areas where material differences remain

Despite convergence, key differences still exist.

Property, plant and equipment (PPE)

• IFRS (IAS 16) allows a revaluation model. Assets like hotel land and buildings can be carried at fair value, with revaluation surplus in equity.

• US GAAP (ASC 360) uses a historical cost model with impairment only, no upward revaluation.

Impairment of long-lived assets and goodwill

• IFRS (IAS 36) uses a one step impairment test based on recoverable amount, defined as the higher of fair value less costs of disposal and value in use (discounted cash flows).

• US GAAP (ASC 360 and ASC 350) uses a recoverability test for long-lived assets based on undiscounted cash flows and separate goodwill rules, which can delay impairment compared with IFRS. Reversals of impairment (other than for some held-for-sale assets) are not allowed under US GAAP; IFRS permits reversals for assets other than goodwill.

Lease details

• IFRS 16 uses a single lessee model with lease expense split into depreciation and interest for almost all leases, and offers explicit exemptions for low-value and short-term leases.

• ASC 842 keeps a dual lessee model. Both finance and operating leases go on balance sheet, but P&L presentation differs, which affects EBITDA and interest metrics.

Right-of-use revaluation

• IFRS - The core difference remains the revaluation model for Property, Plant and Equipment (PPE), which IFRS (IAS 16) permits for assets like hotel land and buildings, but US GAAP (ASC 360) prohibits.

• US GAAP - While the underlying PPE can be revalued under IFRS, ROU assets acquired through leases must generally be carried at cost less accumulated depreciation under both IFRS 16 and ASC 842 (with the exception of ROU assets qualifying as Investment Property under IFRS).

These differences show up most clearly in hotel real estate and large lease portfolios rather than in pure revenue timing.

3. Property, plant and equipment for hotels and resort operators

3.1 Cost vs revaluation model

Under IAS 16, after initial recognition an entity can choose:

• Cost model: cost less accumulated depreciation and impairment.

• Revaluation model: fair value at revaluation date less subsequent depreciation and impairment.

For hotel groups operating under IFRS:

• They can revalue land and buildings used as hotels or resorts.

• Revaluation surpluses go to other comprehensive income (OCI) and a revaluation reserve in equity.

• Depreciation going forward is based on the new fair value.

US GAAP does not permit general upward revaluation of PPE. The guidance in ASC 360 is built on historical cost, adjusted only for depreciation and impairment.

Practical implications for hotels

In a rising property market, IFRS groups may show:

• Higher PPE carrying values.

• Higher depreciation.

• Larger equity.

US GAAP groups will show:

• Lower PPE carrying values.

• Lower depreciation.

• No revaluation reserves.

That means leverage ratios like net debt to tangible equity can look better under IFRS when material revaluations have been booked, even if the economic risk profile is the same.

3.2 Component depreciation

Both frameworks allow component depreciation, but the emphasis differs:

• IFRS explicitly requires significant parts of an asset with different useful lives to be depreciated separately. For a hotel building, items like structure, roof, lifts, central plant and FF&E may be separate components.

• US GAAP permits component depreciation, but it is less prescriptive and not universally applied in practice.

For a hotel company, a rigorous IFRS component approach can:

• Front-load depreciation on shorter-lived items like soft furnishings.

• Lower profit in early years of a refurbishment cycle.

• Provide a better match between cost and economic usage, which is useful for capex planning.

3.3 Asset retirement obligations and refurbishment

• Under both frameworks, obligations to restore leased sites or remove fixtures are recognised as asset retirement obligations, but IFRS permits adding these costs to inventory in some cases while US GAAP capitalises them to the related PPE.

• For hotel portfolios with long-term leases, IFRS groups need to consider whether AROs affect asset componentisation and ROU measurement.

4. Leases: hotels, offices, aircraft and vehicles

4.1 IFRS 16 vs ASC 842 in summary

Both standards require:

• Recognition of a lease liability at the present value of future lease payments.

• Recognition of a right-of-use asset measured initially at cost.

Key structural differences:

IFRS 16

• Single lessee model.

• Lease expense is split into depreciation and interest.

• Short-term and low-value exemptions available, optional by class of underlying asset.

ASC 842

• Two lessee types: finance leases and operating leases.

• Both on balance sheet, but operating leases present a single straight-line lease cost, which keeps EBITDA higher compared with finance leases.

4.2 Hotels

For hotel owners or long-term operators:

• Under IFRS 16, large property leases are almost always on balance sheet and treated like finance leases in substance.

• Under ASC 842, classification between operating and finance leases still affects P&L pattern and EBITDA.

A lessee hotel group that wants to optimise EBITDA presentation may see different incentives under US GAAP vs IFRS when negotiating lease terms, especially around options, variable rent and residual value guarantees.

4.3 Tour operators and travel agents

Leases in this sector include:

• Office leases and call centres.

• IT equipment, data centres and server housing.

• Vehicle fleets, transfer buses and sometimes aircraft wet leases.

Points to note:

• IFRS 16 has specific guidance on subleases, which can drive a sublease into finance lease classification more often than under ASC 842.

• IFRS allows revaluation for certain ROU assets linked to property classes that use revaluation under IAS 16, which has no US GAAP equivalent.

This is relevant for tour operators who lease and sublet hotel capacity, or who sign master leases over buildings and then sublease individual units or floors.

5. Revenue recognition: hotels

5.1 Core room revenue and packages

Under both frameworks, room revenue is recognised when the performance obligation is satisfied, which is typically as the guest stays.

• A non-refundable booking fee for a stay is not recognised immediately if there is still a substantive performance obligation. It is recognised as revenue over the stay period.

For packages (for example, hotel plus breakfast plus airport transfer):

• IFRS 15 and ASC 606 require identification of distinct performance obligations and allocation of the transaction price based on relative stand-alone selling prices.

• In practice, both frameworks usually lead to very similar answers on whether breakfast or transfer is separate from the room, although judgements can differ at the margin.

5.2 Resort fees, service charges and tourism taxes

Resort fees, mandatory service charges and local hotel taxes can be:

• Part of the transaction price if collected on behalf of the entity as principal.

• Amounts collected on behalf of third parties, in which case they are excluded from revenue and treated as taxes.

IFRS 15 and ASC 606 both have specific guidance on consideration payable to a customer and amounts collected on behalf of third parties. For hotels, the key is whether the entity controls the service before transfer.

There is no systematic bias between IFRS and US GAAP here now that both use the same control-based model. Differences arise from judgement, not from the wording of the standards.

5.3 Loyalty programmes and points

Under old IAS 18 and IFRIC 13, loyalty programmes were treated using a separate “award credit” model. Now:

• IFRS 15 treats loyalty points as a separate performance obligation if they provide a material right. The transaction price is allocated between the stay and the points. Revenue linked to the points is deferred until redemption or until breakage is recognised.

• ASC 606 applies the same logic, and the FASB and IASB explicitly converged loyalty and principal vs agent guidance.

For hotel chains, this means:

• Large loyalty point liabilities are broadly comparable under IFRS and US GAAP.

• Breakage is recognised in proportion to expected redemptions, under both frameworks, when it is highly probable that recognising breakage will not result in a significant reversal of revenue.

6. Revenue recognition: travel agents and OTAs

6.1 Principal vs agent

For travel agents, host agencies and OTAs, the critical question is whether revenue is:

• Gross (principal) or

• Net commission (agent).

IFRS 15 and ASC 606 use identical control-based indicators, including:

• Who controls the service before transfer.

• Who is primarily responsible for fulfilling the promise.

• Who has inventory risk.

• Who has discretion in setting prices.

In practice:

• An OTA selling a hotel room where the hotel sets price and bears inventory risk is usually an agent, both under IFRS and US GAAP.

• A bedbank or tour operator that guarantees blocks of inventory and sets its own retail price is usually a principal.

Historic talk of “US GAAP being more rigid” and IFRS being more flexible is no longer accurate in 2025. The literature is converged, and most differences now arise from business model structuring, weak documentation or inconsistent internal policies.

6.2 Commissions, overrides and GDS / BSP cycles

Common income streams:

• Base commissions from suppliers.

• Volume overrides and marketing support funds.

• Service fees charged to clients.

• GDS incentives and BSP rebates.

Under both IFRS 15 and ASC 606:

• These are part of the transaction price if they relate to the main contract with the customer.

• Variable consideration is recognised only to the extent it is highly probable that a significant revenue reversal will not occur.

The main differences in practice:

• Some US GAAP reporters historically treated certain marketing funds as a reduction of cost rather than revenue, but ASC 606 requires analysis of whether amounts are consideration payable to a customer, which is now aligned with IFRS.

• Contract cost capitalisation (for example, incremental costs of obtaining a contract such as sales commissions for corporate travel accounts) is handled similarly in IFRS 15 and ASC 606, although disclosure practice sometimes differs.

7. Revenue recognition: tour operators and DMCs

7.1 Multi-day tours and over-time revenue

Tour operators and DMCs sell:

• Multi-day packages.

• Series departures.

• Bespoke itineraries.

IFRS 15 and ASC 606 both treat these as performance obligations that may be satisfied over time if:

• The customer simultaneously receives and consumes benefits as the entity performs, or

• The entity’s performance creates or enhances an asset that the customer controls, or

• The performance does not create an asset with alternative use and the entity has an enforceable right to payment for performance to date.

For a multi-day escorted tour:

• Many operators recognise revenue over the trip based on days of service or costs incurred.

• Both frameworks allow this, provided the criteria above are met.

7.2 Cancellations, refunds and breakage

Key issues:

• Non-refundable deposits.

• Cancellation penalties.

• Breakage when customers do not travel.

Both IFRS 15 and ASC 606:

• Treat penalties and non-refundable deposits as variable consideration, constrained until it is highly probable that they will not reverse.

• Require reversal of revenue if performance obligations will not be satisfied and amounts must be refunded.

Practically, tour operators should maintain robust data on:

• Historical cancellation rates.

• No-show patterns.

• Refund policies and any legal or constructive obligations.

8. Impairment, goodwill and brand value

8.1 Cash-generating units vs reporting units

Under IFRS:

• IAS 36 requires impairment testing at the level of cash-generating units (CGUs), which are the smallest groups of assets generating largely independent cash inflows.

Under US GAAP:

• ASC 350 tests goodwill at the level of reporting units, generally one level below operating segments.

In a hotel or tour operator group:

• CGUs might be individual hotels, groups of hotels in a city, or a DMC entity in a destination.

• Reporting units can be broader, for example an Americas segment or a “Cruise and Tours” reporting unit.

This can lead to different timing and magnitude of impairment charges, especially after a downturn in a specific market.

8.2 One step vs recoverability testing

• Under IAS 36, impairments are recognised when carrying amount exceeds recoverable amount, which is always based on discounted cash flows or fair value less costs of disposal.

• Under ASC 360, long-lived assets held and used are first tested for recoverability using undiscounted cash flows. If not recoverable, an impairment loss is measured using fair value.

Because undiscounted cash flows will normally be higher than discounted cash flows, US GAAP can delay recognition of impairment compared with IFRS for underperforming hotel properties or DMC operations.

8.3 Reversals

• IFRS allows reversal of impairment (except for goodwill) if recoverable amount increases, for example when a destination recovers after a geopolitical shock.

• US GAAP generally prohibits reversals of impairments of long-lived assets and goodwill.

This is a major structural difference. IFRS financial statements may show more volatility as impairments are booked and then reversed. US GAAP statements tend to reflect impairments as one-way adjustments.

9. Tax and deferred tax

While your question is focused on accounting standards, for any THL group tax is inseparable from reporting.

• Under IFRS, IAS 12 governs income taxes.

• Under US GAAP, ASC 740 is the equivalent.

The largest tax differences now tend to arise from the underlying pre-tax differences, for example:

• Revaluations of hotel properties under IFRS with no equivalent under US GAAP.

• Different timings of impairment and depreciation.

• Lease recognition differences that affect tax basis in some jurisdictions.

Recent comparisons highlight that, although both frameworks use a temporary difference approach, detail differences in how deferred tax is recognised for revaluations and some share-based payments can affect effective tax rates.

For hotels, tour operators and agents, this means:

• Groups reporting under both frameworks must track tax effects of revaluations, component depreciation and ROU assets carefully.

• The cash tax profile will be the same, but timing of deferred tax expense may differ.

10. Beyond technicals: systems, controls and the Tourism business model

One of its key messages still holds in 2025: IFRS vs US GAAP is more than accounting entries, it affects systems, contracts, governance and control.

Systems and data

• Lease accounting tools must handle:

  • IFRS 16 single-model accounting with low-value exemptions.

  • ASC 842 dual-model accounting and classification tests.

• Revenue systems must support:

  • Multi-element contracts and allocation.

  • Principal vs agent analysis, including for bedbanks and OTAs.

  • Loyalty points and breakage models.

KPI design

• Under IFRS 16, EBITDA is higher because lease costs are split between depreciation and interest.

• Under ASC 842, operating lease expense for many leases remains straight-line, so EBITDA is affected differently.

• Analysts increasingly adjust for lease capitalisation, but internal targets still often use the accounting numbers, so framework choice can influence bonus schemes and covenants.

Contracts and legal terms

• Revenue profile depends on who controls the service and who bears inventory risk, rather than who invoices whom.

• M&A deals involving mixed IFRS and US GAAP groups must adjust purchase price models for:

  • Revalued hotel properties.

  • Different impairment histories.

  • Lease capitalisation approaches.

11. So, which framework is “better” for Tourism businesses?

In 2025, it is no longer accurate to say that:

• IFRS is “principles-based and flexible” and US GAAP is “rules-based and rigid” in a way that produces fundamentally different answers for revenue in travel and hospitality.

For revenue and contracts, the frameworks are deliberately aligned. IFRS 15 and ASC 606 share structure and wording, and post-implementation reviews by both the IASB and FASB have confirmed that practice is broadly converged on principal vs agent, loyalty programmes and variable consideration.

The real remaining differences that a hotel or travel group needs to understand are:

Property and impairment

• IFRS permits revaluation and impairment reversals, which makes IFRS balance sheets better at tracking economic value of hotel real estate, at the cost of more volatility and complexity.

• US GAAP keeps PPE mostly at historical cost, with more conservative impairment recognition and no reversals.

Lease presentation

• IFRS 16’s single model changes EBITDA and interest line items compared with ASC 842.

• US GAAP still uses operating vs finance lease classification, which matters for P&L patterns and ratios.

Detailed tax impacts

• Differences in revaluation and impairment flows, and in ROU accounting details, feed into deferred tax differently.

For groups that operate hotels, travel agencies and tour operations across IFRS and US GAAP jurisdictions, the priority is not arguing which is better, but ensuring:

• Consistent internal policies on principal vs agent, loyalty accounting, and impairment assumptions.

• Robust reconciliations when bridging IFRS segment reporting to US GAAP consolidated accounts or vice versa.

• Clear communication with investors and lenders on how lease and property policies affect reported leverage and EBITDA.

References

• ASC 360/IAS 36 Impairment Measurement Comparison
  https://dart.deloitte.com/USDART/home/codification/presentation/asc205-20/roadmap-disposals-long-lived-assets-discontinued-operations/chapter-2-long-lived-assets-classified/2-5-measurement-an-impairment-loss

• ASC 360 Impairment Testing for Long-Lived Assets (Held and Used)
  https://www.stout.com/en/insights/article/asc-360-impairment-testing-long-lived-assets-classified-held-and-used

• Lease Accounting – IFRS Standards vs. US GAAP (Sublease Divergence)
  https://kpmg.com/us/en/articles/2022/lease-accounting-ifrs-standards-us-gaap.html

• IFRS vs. US GAAP – Leases (Sublease and Exemptions)
  https://dart.deloitte.com/USDART/home/publications/deloitte/additional-deloitte-guidance/roadmap-ifrs-us-gaap-comparison/chapter-5-broad-transactions/5-7-leases

• US GAAP vs. IFRS – Property, Plant and Equipment Comparison
  https://rsmus.com/content/dam/rsm/insights/financial-reporting/us-gaap-vs-ifrs-comparisons/us-gaap-vs-ifrs-property-plant-equiment.pdf

• IFRS vs. US GAAP – PP&E Component Depreciation
  https://dart.deloitte.com/USDART/home/publications/deloitte/additional-deloitte-guidance/roadmap-ifrs-us-gaap-comparison/chapter-1-assets/1-6-property-plant-equipment

• Defining Principal and Agent Roles (ASC 606/IFRS 15)
  https://www.hubifi.com/blog/agent-vs-principal-revenue

• IFRS 15 Post-Implementation Review (PIR) – Principal vs. Agent
  https://www.ifrs.org/content/dam/ifrs/meetings/2024/february/iasb/ap6b-ifrs-15-pir-principal-vs-agent-considerations.pdf

• Revenue from Customers’ Unexercised Rights (Breakage) – IFRS
  https://ifrscommunity.com/knowledge-base/revenue-from-customers-unexercised-rights-breakage/

• ASC 606 – Unexercised Rights and Breakage (Constraint)
  https://dart.deloitte.com/USDART/home/codification/revenue/asc606-10/roadmap-revenue-recognition/chapter-8-step-5-determine-when/8-8-customers-unexercised-rights-breakage

• RevenueHub: Methods for Recognizing Breakage Revenue (ASC 606)
  https://www.revenuehub.org/article/unexercised-rights

• ASC 606 vs. IFRS 15 (Collectibility and Contract Costs)
  https://www.hubifi.com/blog/asc-606-vs-ifrs-15

• IFRS 16 vs. ASC 842 – Exemptions and Subleasing
  https://www.occupier.com/blog/ifrs-16-vs-asc-842/

• IFRS 16 Leases Standard (ROU Asset Measurement)
  https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2024/issued/part-a/ifrs-16-leases.pdf?bypass=on

• ACCA: Sale and Leaseback Accounting under IFRS 16
  https://www.accaglobal.com/gb/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/ifrs16.html

• GAAP Dynamics: Impairment Loss under ASC 360 (Two-Step Test)
  https://www.gaapdynamics.com/insights/blog/2017/01/17/a-timely-reminder-accounting-for-an-impairment-loss-under-asc-360/

• IAS 36 Impairment of Assets (Recoverable Amount Definition)
  https://www.ifrs.org/issued-standards/list-of-standards/ias-36-impairment-of-assets/#:~:text=Recoverable%20amount%20is%20the%20higher,parties%20less%20costs%20of%20disposal.

• IAS 37 Provisions, Contingent Liabilities and Contingent Assets
  https://www.iasplus.com/en/standards/ias/ias37

• IAS 16 Property, Plant, and Equipment (Cost Elements)
  https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards/english/2022/issued/part-a/ias-16-property-plant-and-equipment.pdf?bypass=on