What is the Uniform System of Accounts for the Lodging Industry? (Why does It Matter?)

  • Home
  • Hotel Development
  • What is the Uniform System of Accounts for the Lodging Industry? (Why does It Matter?)

The Uniform System of Accounts for the Lodging Industry (USALI) was first published by a committee of the Hotel Association of New York City (HANYC) in 1926. The committee was chaired by E. M. Statler the founder of Statler Hotels. Among the other eight Proprietary Committee members were the then owners of The Waldorf Astoria, Hotel Astor, Hotel Willard and Hotel Commodore. The Accountants’ Committee included the comptrollers of those hotels and others including Hotel Pennsylvania, The Biltmore, The Plaza and, of course, the Statler Hotels Company. The committee was chaired by William J. Forster, CPA as in PKF. The New York State Society of CPAs and the AICPA were also represented.

The group saw the need for common financial language and to be able to compare statistics. It would also evolve that it would help in valuing hotels which at that time was done primarily by CPA firms. The common statistical formulas such as Revenues and Costs per Available Room and per Occupied Room, what denominator a re used for calculating various percentages evolved to be critical benchmarks for owners and managers even today.

In 1961 the American Hotel & Lodging Association (AH&LA) published a separate edition for small hotels. That format, which was very similar to the larger hotel edition, was updated twice until 1996 when the two systems were combined. Until last year the copyright for the USALI was still owned by the HANYC but it recently sold the copyright to the Hotel Financial and Technology Professionals Association (HFTP) which is the successor to the original Accountant’s Committee.

Periodic revisions of the USALI, which are prepared every four to seven years, are written by the Financial Management Committee of the AH&LA. It is comprised primarily of representatives of hotel ownership and management but also includes representation from accounting, franchising, CBRE/PKF Research and Smith Travel Research.

The USALI is referenced in numerous types of agreements relating to the hotel industry such as mortgages, management agreements, franchise agreements, leases, and other documents. Important provisions in these agreements are tied to the USALI and impact base fees, termination, incentive fees, and other triggers or thresholds for both parties. Usually it is prefaced with the words, “the latest edition” in order to require the parties to keep current with latest standards. The latest edition is the 11 the Edition published in 2014. As in the past, it is consistent with US GAAP. Future editions are expected to become consistent with the International Financial Reporting Standards (IFRS).

Why are there successive editions? Because the hotel industry, its investors, the market and technology keep evolving. Think of things like market segmentation, distribution channels, telephone technology, guest room technology, etc. Also think of changes to payroll for instance, hotels don’t have Seamstresses anymore but we do have Social Media Managers.

Kirby Payne
https://hvs.com/personnel/340-kirby-payne

Kirby Payne, who has over 40-years of diversified international experience in the hotel industry, is President of HVS Hotel Management and HVS Asset Management – Newport and a member of the Board of Directors of HVS. He was honored to serve as Chairman of the American Hotel & Lodging Association (AH&LA) based in Washington, DC in 2002. For many years, he served on the industry’s Certification Commission, the entity overseeing all professional certification in the U.S. hotel industry, and which is also used globally. He literally grew up in hotels since he was four years old when his father was the Controller and later General Manager for Inter-Continental Hotels’ first hotel. Payne has lived in Brazil, the Caribbean and Mexico. His experience includes consulting, operations, development and ownership including single- and multi-property operations. He was recognized by Lodging Magazine as one of the “Lodging Industry’s 75 Leaders”.



Leave a Reply

Your email address will not be published. Required fields are marked *