In the very near future, the lodging industry will have a brand-new edition of the Uniform System of Accounts for the Lodging Industry (USALI) — the 12th Revised Edition. This latest release has been meticulously updated with guiding principles to enhance transparency in reporting, broaden data sets to better inform decision-making, and align with contemporary practices.
The revisions were written by the Global Finance Committee (GFC), a joint forum sponsored by Hospitality Finance and Technology Professionals (HFTP®) and the American Hotel and Lodging Association (AHLA). Members of the GFC consist of representatives from ownership, management, brand, education, research, consulting, asset management, and accounting firms. The diversity of the GFC allows for input and feedback from multiple viewpoints across a variety of industry participants from across the globe.
The revised edition incorporates financial and operating reporting changes, a new sustainability reporting section, and a new section specific to all-inclusive hotels.
To support the upcoming release, GFC members will be presenting a series of webinars. Be sure to register for the monthly “USALI 12th Revised Edition, Deep Dive” webinars running from May 23 through September 2024. Accompanying the webinars will be correlating blog posts, starting with this one — published in two parts. This dual post is a run-through of the major changes, first are the updates to assist in reporting transparency. Following-up will be a post on the changes that bring the USALI in alignment with contemporary practices.
Increased Transparency
Lodging industry professionals have become increasingly savvy and dependent on the use of data to inform the decisions they make. Accordingly, there has been an expressed desire to view the most relevant data as efficiently as possible. This feedback influenced the GFC to add the following new revenue and expense categories.
Guest Loyalty Program Costs
Capturing guest loyalty has become an important tactic for hotels to increase market share and sustain profitable operations. Consumers continue to show interest in their loyalty program member benefits when staying at their preferred hotels.
Given the cost increase of guest loyalty programs, the 12th Revised Edition has added expense categories across multiple departments. These include Loyalty Program Member Benefits, Service Recovery, Loyalty Program, and Loyalty Program — Promotion.
Executive Lounges
An offshoot of guest loyalty programs’ popularity is the emergence of Executive Lounges. Because of this, it’s imperative to track the associated revenues and expenses on a discrete basis. With this data, owners and operators can effectively measure the costs and benefits associated with these operations.
For hotels that incur significant Executive Lounge revenues and expenses, there is a new Executive Lounge Subschedule 1-1 in the Rooms Department. In addition, Executive Lounge revenue is now a subcategory within Other Rooms Revenue.
Full Time Equivalents (FTE)
Labor is the largest expense for hotels, typically averaging 30 percent of revenues and 40 percent of expenses. Historically the USALI tracked salary, wage, and benefits expenditure data across multiple labor categories. But this did not collect metrics that measured labor efficiency.
To help with this type of calculation, a new mandatory schedule has been added. The Full-Time Equivalent (FTE) Schedule measures employee hours in each operating and undistributed department. A formula is provided to ensure the consistent calculation of FTEs.
Brand and Operator Costs
The extent of services provided by the brands and management companies has expanded over the years. Historically, most fees were recorded in a few major categories; but in recent years, the services provided by management companies and brands have expanded. To accommodate for this, an Annual Mandatory Brand and Operator Cost Schedule is included to capture these expenses in one, easily-viewable table. This schedule should be completed once a year when the associated costs have been tabulated.
Miscellaneous Income
Revenues are recorded as Miscellaneous Income when they occur outside the Rooms or Food and Beverage departments and are mandated to be recorded on a net basis. Recently though, hotels have grown these revenue sources with expansion of their service and amenity offerings. To record these net revenues and provide clarity of existing sources, the 12th Revised Edition has added new Miscellaneous Income categories and expanded guidance for others.
Additional Changes and Guidance
It is important to note that this article provides a high-level summary of the changes from the 11th to the 12th Revised Edition. For a more comprehensive understanding of the changes, continue to participate in this “Deep Dive” by registering for the webinar series and the companion blog posts. Next up: “Highlights of Major Changes, Contemporary Practices.” And finally, the USALI website is your center for webinar archives, guidance articles, and other resources.
