USALI (Uniform System of Accounts for the Lodging Industry) Standard - what it is and how it can improve the efficiency of hotel business.

Introduction

The USALI standard (Uniform System of Accounts for the Lodging Industry) is a set of rules and instructions developed for the hotel industry segment, which allows you to standardize the accounting statements and financial indicators of hotels. The eleventh edition of the USALI standard was relevant until recently, but now the twelfth version has been released, which includes a number of changes and additions related to changes in the industry and market requirements.

USALI creation and version history

USALI was first introduced in 1926 by the American Hotel and Motel Association (AH&LA) in collaboration with the Hotel Accounting Institute. Since then, the system has undergone many changes and updates to meet the modern requirements of the hotel business.

• First version (1926):
• The main goal is to standardize accounting in the hotel industry.
• The second version (1961):
• New sections are enabled and existing ones are updated.
• Third Version (1977):
• <i>New categories of income and expenses have been introduced</i><span>.</span>
• The Fourth Version (1986):
• Updated accounting standards for international hotels.
• The Fifth Version (1996):
• New methods for analyzing financial data are included.
• The Sixth Version (2006):
• Modern tools for revenue management have been introduced.
• The Seventh Version (2014):
• <i>Updated accounting standards for the digital age</i><span>.</span>
• Eighth Version (2018):
• New sections on sustainable development and risk management are included.
• The ninth version (2020):
• Updates are included to account for new business models and technologies.
• Tenth version (2022):
• New standards for accounting in the context of a pandemic and post-pandemic period have been introduced.
• The Eleventh Version (2015):
• Important changes have been made to improve benchmarking, and new financial metrics and operational metrics have been introduced.
• The twelfth version (2024):
• Released on July 8, 2024, with an effective date of January 1, 2026. It includes the latest changes and updates to meet the modern requirements of the hotel business.

Basic principles of USALI

One of the key goals of the USALI standard is to increase the transparency and comparability of hotel financial information. This is achieved by establishing a single reporting format and methodology that allows you to compare the financial performance of different hotels and analyze their effectiveness.

• Standardization:
• USALI offers a single format for accounting, which makes it easier to compare financial indicators between different hotels.
• Transparency:
• The system allows you to track your income and expenses more accurately, which helps to increase the transparency of financial statements.
• Analytics:
• USALI provides tools for detailed analysis of financial data, which helps you make informed management decisions.
• <b>Flexibility</b><span>:</span>
• Despite standardization, the system allows you to adapt accounting to the specific needs of a particular hotel.

USALI Sections

1. Revenue:

• Habitation
• Food and beverages
• Conferences and events
• Additional services (spa, fitness, parking, etc.)

2. Expenses:

• Salaries and social benefits
• Public utilities
• Marketing and advertising
• Repair and maintenance
• Administrative expenses

3. Capital expenditures:

• Investment in real estate
• Hardware update
• Infrastructure development

Reporting principles

• Unified format:
• All reports must be prepared in accordance with the uniform format established by USALI.
• Regularity:
• Reports should be prepared regularly (monthly, quarterly, or annually) to track the dynamics of financial indicators.
• Details:
• Reports should contain detailed information about income and expenses, which allows for in-depth analysis.
• Comparative analysis:
• Reports should include data for comparison with previous periods and similar hotels.

Key changes in the 12th version of USALI

1. Classification of residential income:

• In the 12th edition, issue revenue is recorded net of commission.
• The principles of accounting for Online Agency bookings (OTA) are described in detail.
• Included are instructions for accounting for the cost of the guest loyalty program and managing booking channels.

2. Income from food and beverages:

• New categories of food and beverage revenue were introduced, including banquets, catering, room service, mini bars, and retail.

3. Personnel and FTE costs:

• The summary report on payments with personnel has been revised, which allows you to more effectively manage the number of employees, work schedule, and payroll budgets.

4. Executive lounge at the hotel:

• A dedicated report for analyzing executive lounge revenues and costs has been introduced, which allows you to more accurately divide revenues and costs between divisions.

5. Guest Loyalty Program:

• Dedicated accounts for accounting for loyalty system costs and analyzing the effectiveness of various programs are included.

6. Brand and operator costs:

• Added a dedicated report that contains a set of services, cost classification, and principles for allocating total brand and operator costs.

7. Water, energy and waste:

• Included is a revised energy expenditure report and new indicators to track the effectiveness of sustainability initiatives.

8. All Inclusive:

• A new set of reports has been introduced for effective management of All-inclusive hotels.

Advantages of using the USALI format

• Uniformity of accounting and reporting.
• Simplify comparison with the industry to get valuable business insights.
• Increased responsibility of individual departments.
• Detailed performance data.
• High degree of flexibility and ease of use.

USALI makes it easier to compare performance, whether with the broader industry or, for chain hotels, compare results for each facility. This allows you to pinpoint where you're doing well and where you're falling behind.

Key indicators and their formulas

Below are the most significant indicators and calculation formulas that are included in USALI:

1. Total Revenue:

Total Revenue = Rooms Revenue + Food and Beverage Revenue + Other Revenue

2. Rooms Revenue:

Rooms Revenue = Number of Rooms Sold * Average Room Rate

3. Food and Beverage Revenue:

Food and Beverage Revenue = Number of Meals Sold * Average Meal Price

4. Other Revenue:

Other Revenue = Revenue from services provided by the hotel, such as spa, parking, or phone usage

5. Occupancy Percentage:

Occupancy Percentage = (Number of Rooms Sold / Number of Available Rooms) * 100

6. Average Daily Rate:

Average Daily Rate = Rooms Revenue / Number of Rooms Sold

7. Revenue per Available Room:

Revenue per Available Room = Rooms Revenue / Number of Available Rooms

8. Food and Beverage Cost Percentage:

Food and Beverage Cost Percentage = (Cost of Food and Beverage Sold / Food and Beverage Revenue) * 100

9. Gross Operating Profit:

Gross Operating Profit = Total Revenue - Total Expenses

10. Net Operating Income:

Net Operating Income = Gross Operating Profit - Non-Operating Items

11. Return on Investment (ROI):

ROI = Net Operating Income / Total Investment * 100

Key reports and structure according to the USALI standard

Key reports to be prepared under USALI include::

1. Income Statement: This report provides information about the hotel's income and expenses for a specific period of time. It includes data on revenue from accommodation, food and drink sales, and other services.

2. Balance Sheet: This report shows the financial position of the hotel as of a specific date. The balance sheet shows assets (such as real estate, equipment, debt and inventory) and liabilities (loans, debt and equity).

3. Cash Flow Statement: This report shows changes in the hotel's cash flow over a certain period of time. It includes data on receipts and expenditures of funds from various operations, such as selling rooms, paying suppliers, etc.

4. Departmental Income Statement: This report allows you to analyze the financial results of each individual department in the hotel, such as restaurants, bars, swimming pools, etc. This helps you determine which departments generate high returns and which require additional improvements.

How to properly organize translation of accounting and operational accounting into USALI reporting

Organizing the translation of accounting and operational accounting into USALI reporting involves several important steps. Here are some recommendations on how to properly organize this process and what you need to pay attention to::

1. Study the USALI Standard: Read the main provisions, rules, and requirements of the USALI standard to understand how reporting should be organized and what data should be included.

2. Preparation of accounting systems: Make sure that your accounting and operational accounting systems meet USALI requirements and allow you to generate the necessary reports.

3. Organization of records and documentation: Organize and organize all necessary records and documentation to ensure that USALI reporting is accurate and timely.

4. Employee Training:sure that your employees responsible for accounting and operational accounting are well-versed in USALI requirements and have the necessary skills to properly generate reports.

5. Monitoring and Control:Install monitoring and control systems to verify the accuracy and compliance of USALI reporting. This may include conducting regular audits, comparing data with actual operations, and regularly updating accounting procedures.

It is important to pay attention to the following:

• All reporting should be prepared in accordance with USALI requirements, including the correct classification of income and expenses, the use of appropriate accounts and accounting divisions.
• Timely and accurate reporting is required so that the information is relevant for making managerial decisions.
• Regularly update and improve the reporting system to track changes in USALI requirements and take them into account when generating reports.

Conclusion

The USALI standard is an important tool for hotels that allows you to simplify and unify accounting statements and analyze financial performance indicators of hotels. Its use allows you to increase the transparency and efficiency of accounting, as well as make informed management decisions. Implementing USALI may require some effort, but the results you'll get are worth it. The system helps launch your hotel to improved and lasting success, and our hotel consultants highly recommend it.