Revenue recognition

On January 1, 2018, the Company adopted Topic 606, Revenue from Contracts with Customers (“Topic 606”), using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while comparative information has not been restated and continues to be reported under the accounting standards in effect for the period presented. The adoption of Topic 606 did not have a material impact and as such no amounts for the cumulative effect from adopting the standard were required to be recorded in opening equity as of January 1, 2018.

Nature of goods and services

The following is a description of principal activities from which the Company generates revenue. Revenues are recognized when control of the promised goods or services are transferred to customers, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company generates all of its revenue from contracts with customers.

Hotels

Hotels revenue is recognized when the rooms are occupied and the services are performed. Revenue derived from other services, which primarily consist of food and beverage provided in the hotels, are recognized when the goods are consumed. The amount of revenue recognized is based on amounts stipulated in the contract. Payment is typically received upon check-out.

For hotels revenue, the Company recognizes revenue over time. The amount of revenue recognized is based on the relative standalone selling price of each room night. A time-elapsed output method is used to measure progress and provides a faithful depiction of the transfer of services to the customer as the value transferred to the customer is substantially the same every night of the stay.

For food and beverage revenue, the Company recognizes revenue at the time the goods and services have been provided as this is the point at which control is transferred to the customer.

Trains and cruises

Trains and cruises revenue is recognized ratably over a trip. Revenue derived from food and beverage provided on the trains and cruises is recognized when the goods are consumed. The amount of revenue recognized is based on amounts stipulated in the contract. Payment is typically received upfront.

For trains and cruises revenue, the Company recognizes revenue over time. A time-elapsed output method is used to measure progress and provides a faithful depiction of the transfer of services to the customer as the value transferred to the customer is substantially the same every night of the trip.

For food and beverage revenue, the Company recognizes revenue at the time the goods and services have been provided as this is the point at which control is transferred to the customer.

Management fees

Revenue under management contracts is recognized based upon on an agreed base fee and additional revenue is recognized on the attainment of certain financial results, primarily operating earnings, as specified in each contract. Management fees are typically billed and paid monthly.

For management fee revenue, the Company recognizes revenue over time. A time-elapsed output method is used to measure progress and provides a faithful depiction of the transfer of services to the customer as the value transferred to the customer is substantially the same every day. Fees are variable with the uncertainty of base fees being resolved monthly and the uncertainty of incentive fees being resolved annually. These fees are included in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur once the uncertainty is resolved.

Disaggregation of revenue

The following tables provide information about disaggregated revenue by type of service being provided, primary geographical market, and timing of revenue recognition, and includes a reconciliation of the disaggregated revenue with reportable segments:



	Year ended December 31, 2018
	Europe	North America	Rest of world	Owned trains & cruises	Part-owned hotels	Part-owned trains	Total
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
Timing of revenue recognition
Goods and services transferred at a point in time	85,485	57,648	44,923	5,510	—	—	193,566
Services transferred over time	152,955	74,678	77,240	65,257	2,363	10,777	383,270

	238,440	132,326	122,163	70,767	2,363	10,777	576,836

Contract balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers:



	Balance, January 1, 2018	Balance at December 31, 2018
	$’000	$’000

Receivables	34,373	37,722
Contract assets	—	—
Contract liabilities (deferred revenue)	32,786	40,232

The amount of revenue recognized in the period that was included in the opening contract liabilities was $28,929,000. This revenue consists primarily of the provision of hotel and trains and cruises services.

Contract liabilities include payments received in advance of performance under the contract, and are realized with the associated revenue recognized under the contract.

For trains and cruises services, the timing of payment is typically upfront, therefore a contract liability is created when payment is made in advance of performance.

Practical expedients

The Company has elected certain of the optional exemptions from the disclosure requirement for remaining performance obligations for specific situations in which an entity need not estimate variable consideration to recognize revenue. Accordingly, the Company applies the practical expedient to its management fee contracts. These contracts are typically long-term and the performance obligation consists of providing hotel management services to the owner. Revenue is recognized based upon an agreed base fee and additional revenue is recognized on the attainment of certain financial results, primarily operating earnings, as specified in each contract. As such, fees are variable with the uncertainty of base fees being resolved monthly and the uncertainty of incentive fees being resolved annually. These fees are included in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur once the uncertainty is resolved.

The Company has elected the practical expedient to not disclose revenue related to remaining performance obligations that are part of a contract with an original expected duration of one year or less.

The Company has elected the practical expedient to not take into account the effects of significant financing components in the transaction price when the duration of financing is one year or less.