The AH&LA Financial Management Committee (FMC) conducted a survey on the Uniform System of Accounts for the Lodging Industry (USALI) earlier this year, specifically focusing on issues that merit further discussion by the FMC.
Revisions to the USALI are overseen by the FMC, a majority of which are also HFTP members. Robert Mandelbaum is director of research information services at CBRE Hotels’ Americas Research and a current member of the FMC. Mandelbaum presented the data collected from the survey responses, as well as an executive summary detailing his observations.
The survey was distributed to lodging industry accounting and finance professionals working for independent properties, resorts, corporate offices and hotel management companies representing a myriad of geographical regions that span the globe.
There has been a very high degree of acceptance of the 11th Edition of the USALI, while there are some issues that appear to be in need of additional guidance. Requests were made for additional ratios and analytics. We need to re-emphasize that people can add sub-accounts to track items important to their operations.
Tracking cost of revenue acquisition was addressed in multiple questions, but the feedback was conflicting. The one issue that arose in direct conflict with current USALI guidance: Should service charges be included as revenue?
Finally, the international nature of the survey participant sample was evident (as seen in the service charges in rooms department), but conflicting as well (65 percent indicated there is no need for more emphasis on the IFRS).
Survey Results in Detail:
The majority of respondents were in agreement with many of the current aspects of the USALI.
A smaller majority of respondents (77 percent) believe that no additional operating statistics or ratios need to be presented.
The respondents then indicated the issues where they would most like to see more guidance, including: group discounts, promotions, OTA commissions, rebates and further definition of segments and channels (OTA opaque versus OTA retail).
Labor-related topics where additional guidance was requested included cluster services, shared services, contract services, contract labor and bundled fees.
Affirmative (“yes”) responses were less than 50 percent on each of the following questions:
- Should day use rooms be included in rooms sold statistics?
- Should there be more guidance and accounts for commissions expense (i.e. leisure/group)?
- Should USALI define net acquisition cost (guest room revenue after costs of customer acquisition, including sales and marketing, commissions and costs of loyalty — not included in the USALI 11th Edition)?
However, slightly more than 50 percent of respondents indicated that they would like a definition of Net RevPAR to be included in the USALI (guest room revenue after costs of customer acquisition, including sales and marketing, commissions and costs of loyalty, divided by rooms available — not included in the USALI 11th Edition).
When asked if rooms department service charge revenue is included in the calculation of ADR and RevPAR, 60 percent of respondents said no. (Mandelbaum noted that 40 percent of the respondents indicated they oversee properties that charge service charge in the rooms department. “Room service” was offered as a separate category).
When asked where food and beverage (F&B) minimums should be recorded (contracted revenue minimum not reached), 56.5 percent of respondents indicated “F&B revenue” while 36 percent indicated “miscellaneous income” (7 percent indicated “other”).
The following responses indicated how respondents record customer counts in their operations:
- Number of customers who order an entree (65 percent)
- Number of customers who order only a beverage (36 percent)
- Number of customers seated, even if they do not place an order (29 percent)
- Number of customers in an open bar for banquet event (22 percent)
- Number of customers in bar/lounge, even if they do not place an order (6 percent)
Current USALI guidance defines a customer as one person served in an F&B venue or function space, and total customers as the total number of customers served in an F&B venue or function space.
Fifty-three percent of respondents indicated “no” when asked if the service charge revenue is included in the calculation of revenue statistics for other operated departments.
The following responses were given when asked which revenue recognition areas need more clarity:
- Gross versus net reporting (59 percent)
- Package revenue (58 percent)
- OTA revenue (43 percent)
- Loyalty programs (40 percent)
- Commissions (36 percent)
Smaller percentages of respondents requested more clarity for barter transactions, other room revenue, contracts and memberships.
Sixty-one percent of respondents positively indicated that more accounts and guidance are needed in sales and marketing (i.e. e-commerce, social media and pay-per-click).
The following answers were given when asked where rebates related to energy efficiency capital expenditures should be recorded:
- Utilities (58 percent)
- FF&E Reserve (17 percent)
- Other (15 percent)
- Credit to POM (10 percent)
Currently, operating rebates are recorded in the Utilities department (see Miscellaneous Income — Cash Discounts Earned). The USALI does not address rebates earned from capital expenditures.
When asked about the following energy consumption and sustainable practice ratios and whether they should be included in the USALI: 54 percent of respondents believe BTUs should be included, while 90 percent of respondents believe KwH should be included. (Currently, KwH and BTU references are included in the Ratio section of the USALI).
Eighty-three percent of respondents believe the USALI should discuss the consequences of not complying with the USALI and effective date. The 11th Edition was the first to include an effective date. However, there is currently no discussion of the consequences of non-compliance.
Eighty-three percent of respondents also believe that a Frequently Asked Questions section should be included in the USALI, while 75 percent would like to see an index included. Currently, there is an FAQ section available on the HFTP website that is updated as needed. The current USALI has revenue and expense dictionaries but no index.
The USALI 11th Edition Is Available for Purchase
In 2018, HFTP acquired the copyright to the USALI, a logical step as the association has been connected to the resource since its origins as a sponsor and contributor. HFTP is currently setting up distribution of hard copies of the USALI and will have them available soon. Visit the HFTP website to download the digital version now.
For further assistance, please contact USALI@hftp.org.