Case $22-4$e

Upscale Management Co$.$

Upscale Management Co$.($the "Company"$)$ enters into a contract with Second City Hotels $($the "Customer"$)$ to provide hotel management services. The contract is for a fiveyear period at a fixed price of $$10,000$ per day $($total transaction price of $$18\mathrm{.}25$ million per day $1,825$ days$]).$ The Company's hotel management services include hiring and managing employees, procuring goods and services, and advertising and marketing at one hotel property owned by the Customer.

On a given day, the Company might clean guest rooms, perform marketing efforts to increase occupancy, and operate the concierge desk. The nature of the contract is to provide integrated hotel management services $("$integrated services"$)$ over the term of the contract and not a specific quantity of specified services $($e$.$g$.,$ cleaning $100$ guest rooms per day$).$ The underlying activities can vary significantly from day to day; however, the daily activities are required to satisfy the Company's obligation to provide the integrated services. Therefore, the integrated services transferred to the customer are substantially the same during each period $($i$.$e$.,$ the Customer receives substantially the same benefit each period$).$

In March $2020,$ the World Health Organization declared COVID$-19$ a global pandemic. The COVID$-19$ pandemic and related travel restrictions and other containment efforts have had a significant impact on the travel industry. As a result, after providing two years of integrated services $($for which the Company recognized $$7\mathrm{.}3$ million in revenue $[$ $$10,000$ per day $365$ days per year $2$ years$]),$ because of the conomic downturn resulting from the COVID$-19$ pandemic, the Company agrees to lower the price for the remaining three years of integrated services to $$8,000$ per day.