Just released, the Uniform System of Accounts for the Lodging Industry (USALI) 12th Revised Edition has been meticulously updated by the Global Finance Committee (GFC) with guiding principles to enhance transparency in reporting, broaden data sets to better inform decision-making, and align with contemporary practices.
To support its release, GFC members are also presenting a series of monthly “USALI 12th Revised Edition, Deep Dive” webinars. Accompanying the webinars are correlating blog posts, including this one for the webinar “USALI 12th Revised Edition Deep Dive: Other Reporting Guidance.” Learn more and register to attend the webinar on Sept. 5, 2024, at 11:00 a.m. U.S. CDT. This is the last webinar in the “Deep Dive” series. Archived webinar recordings and blog posts can be found online at https://usali.hftp.org/resources.
Purpose
Rooms revenue and Food and Beverage revenue comprise the vast majority of revenues earned at most hotels. When hotels earn revenue from additional sources, they are reported as either Other Operated Department Revenue in Schedule 3 or Miscellaneous Income in Schedule 4. In general, revenues and expenses determined to be reported on a gross basis are reported in Schedule 3, while net income earned by a hotel is reported in Schedule 4.
Based on questions and feedback received from the industry, most changes to Schedules 3 and 4 in the USALI 12th Revised Edition are clarifications on guidance. The following paragraphs highlight the enhanced guidance and changes to Schedules 3 and 4 in the USALI 12th Revised Edition.
Schedule 3 – Other Operated Departments
Other Operated vs. Minor Operated
Depending on the complexity of the operating department, revenues and expenses can be reported in a Subschedule 3-X as an Other Operated Department or summarized in Subschedule 3-XX as a Minor Operated Department. In general, operated departments reported as a full Subschedule 3-X are those that earn significant revenue and have dedicated staff. When earning the revenue does not require dedicated staff and minor levels of expense are incurred, then the revenues and expenses can be summarized in Subschedule 3-XX.
To assist hoteliers, the USALI 12th Revised Edition includes flow-charts that guide the reader through a series of questions that will determine if the other operated revenue should be reported as an Other Operated Department or a Minor Operated Department.
In the event that a hotel incurs expenses with no associated revenue, then the expenses should be recorded in the department that receives the benefit. Examples may include swimming pools and health centers that are available for free use by guests (primary beneficiary is typically the Rooms Department), as well as complimentary valet parking (primary beneficiary could be Rooms and/or Food and Beverage Department).
Food and Beverage Venue vs. Other Operated Department
Since the USALI 11th Revised Edition, significant changes have been made regarding the way hotels provide food and beverage (F&B) to their guests. To varying degrees, an increase in Grab-and-Go Operations has replaced traditional in-room dining and generic three-meal-a-day restaurants. The complexity of Grab-and-Go Operations varies significantly, which has caused confusion on how to record the resulting revenue.
To aid hoteliers with this decision, the USALI 12th Revised Edition presents flowcharts that assist in the determination of reporting revenues for Grab-and-Go Operations as a Food and Beverage Venue (Schedule 2) or an Other Operated Retail department (Subschedule 3-X).
Mini-Bar
Mini-bar offerings have evolved from a method of selling F&B products to a minor source of revenue maintained by employees from a variety of departments. To provide a common method to monitor this amenity, mini-bar revenues and expenses are now recorded as an Other Operated Department (Schedule 3-X), as opposed to the Food and Beverage Department (Schedule 2).
Golf Department – Water
With the introduction of the new Energy, Water, and Waste Department the cost of water used to irrigate the golf course or fill water features and hazards has been moved to the new Schedule 9.
Schedule 4 – Miscellaneous Income
Extraordinary Cleaning Fees
A new account has been added to capture fees earned when a hotel staff has to conduct an extraordinary amount of additional cleaning. Examples include cleaning a nonsmoking room when a guest smokes in that room, or pet damage in a guest room.
Currency Conversion
Any difference between the amount of foreign currency received from the customer and the actual rate at which that currency is exchanged would be included as a part of this gain or loss.
Space Rental Income
Enhanced guidance has been provided regarding proper classification of lease income as either a Miscellaneous Income (Schedule 4) or Nonoperating Income (Schedule 11).
Resort Fee – Name Change
The name of the Resort Fee account has been updated to Destination, Resort, and Urban Fees.
Promotional Credits
A Promotional Credits line item was added to Miscellaneous Income (Schedule 4) to act as a contra revenue account. This account is the offset for the amount redeemed for revenues generated from promotional credits issued to a guest for hotel offerings such as food and beverage and spa. The revenue is recorded on a gross basis within the department where the credits are redeemed, and the corresponding offset is recorded to this account. The total of Promotional Credits is subtracted from the sum of all the other Miscellaneous Income line items.
