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 webinars. Be sure to register for the monthly “USALI 12th Revised Edition, Deep Dive” webinars running through September 2024. Accompanying the webinars are correlating blog posts, including this one for the webinar “USALI 12th Revised Edition Deep Dive: Part II All-inclusive Hotels.”
Overview
The rising demand in the all-inclusive (AI) hotel segment over the last decade led AI owners and operators to appeal to the GFC to provide guidance. The GFC is pleased to share that the USALI 12th Revised Edition now has an entire section dedicated to reporting these operating results to allow for equitable benchmarking and analysis in this growing segment.
When the GFC began its initial review of AI reporting, it found vast differences from a country and company perspective, as historically many AI hotels were located mainly in the Caribbean. Thus began an in-depth review to identify the best practices that would bring the AI community together to allow for equitable benchmarking and analysis. The Covid-19 pandemic presented both a challenge and an opportunity, as many hotels closed, and travel significantly declined. However, concurrently there was rising demand for AI hotels and a corresponding increase in new entrants. This led to broader industry support in helping to shape this new USALI guidance – with special thanks to leaders from Marriott, Hilton, Hyatt, Playa, Sandals, IHG, STR/Co-Star, Hotel AVE, and the Cornell SC Johnson College of Business.
The AI reporting guidance presented in the USALI 12th Revised Edition represents what the GFC terms AI 1.0, which the committee believes provides a strong foundation on which to bring the diverse AI community together, and on which to build. More specifically, the GFC believes that AI 1.0 will evolve over time similar to the pathway experienced through the harmonization of the world’s accounting standards, albeit much more quickly given the collaborative industry effort to develop this new AI guidance.
Summary of AI Guidance
The AI reporting format presented in the USALI 12th Revised Edition should be adopted by all hotels with all-inclusive package revenue greater than 50 percent of total revenue calculated on a three-year rolling average (and newly-opened hotels forecasting all-inclusive package revenue greater than 50 percent of total revenue). Overall, the AI guidance is conceptually consistent with European Plan (EP) hotels, and the Summary Operating Statements are divided into the same sections.
AI hotels differ from EP hotels which offer room-only rates with options to purchase food and beverage (F&B) and other services à la carte or as a package at the guest’s discretion. AI hotels charge a package rate that includes the room, F&B and entertainment for a set rate.
The USALI for AI hotels includes three revenue categories: Package Revenue, Nonpackage Revenue, and Miscellaneous Income, which are summarized below.
- Package Revenue:
- Not allocated to each of the services within the guest’s package but rather is reported in total.
- Reports guest segmentation consistent with EP hotels.
- Given different statutory requirements across the globe, additional schedules may be required for local reporting.
- Nonpackage Revenue:
- The sale of goods and services not included in the all-inclusive rate.
- Miscellaneous:
- Includes items such as space rental, commissions and interest income (this Schedule is consistent with Part I of the USALI).
There are four categories of operating expenses, which include Rooms, Food and Beverage, Entertainment, and Nonpackage Expense. These AI schedules are generally consistent with the operating expenses for EP hotels with new account definitions included for accounts unique to AI hotels.
The AI Summary Operating Statements include new subtotals for package profit, nonpackage profit, and the total profit before undistributed expenses.
Nonpackage revenues and expenses are summarized on a separate schedule to report the nonpackage profit for each of these activities, which include:
- Food and Beverage
- Weddings
- Health Club and Spa
- Parking and Transportation
- Golf
- Other
The financial ratios and metrics reported in Part II include only those items that are unique to AI properties, which primarily consider the number of guests on property vs. the number of rooms occupied. For the purposes of the financial ratios and operating metrics, all guests are counted equally (e.g., adults and children).
The specific AI metrics include:
- Package Revenue
- Package ADR
- Package RevPAR
- Total Guests in House
- Package Revenue Per Guest
- Total Operating Revenue Per Guest
- Gross Operating Profit Per Guest
- Total Cost Per Guest
