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Your Hotel does not comply with Uniform System of accounting (USALI) – Learn How!!
What is Uniform System of Accounting for hotel / Lodging Industries (USALI) and what are its key features that affect hotel accounting.
The Uniform system of accounting for lodging industries (USALI) is the bible for the accounting and financial standards in the hotel industry. It lays out detail and provides a solid and usable framework for the hotel industry to follow when it comes to how we present financial information.
USALI is followed all over the world by big and small hotels alike. Management companies emphasize on following usali as it provides a uniform basis of accounting and analysis. If there are no standard definitions all hotels would be free to use any type of definition that may suit hotel performance.
USALI provides Standard Templates for financial statements such as,
- Grand P&L
- Department P&L
- Market Segmentations and definition
- Statistics Reports for Detailed analysis
USALI gives clear definition of various accounting terms used in hotel industry for example
- Average daily rate, RevPAR
- Occupancy %
- Available Rooms
- Classify F&B revenue
USALI helps in creating a clear Chart of Accounts for training to hotel staff and also helping to avoid any confusions in recording.
- Revenue Terms
- Market Segmentation and classification of revenue terms.
- Expenses Terms
- Labor cost and classification
- Other non-labour costs by department
In What ways, we have found that USALI is not being followed in accounting practices at majority of hotels around the world?
We have found that there are many areas where requirements laid out in USALI are not being complied with by hotel accounting teams. Some of them are as below
Ways of Allocating package revenue
- New IFRS 15 which is consistent with USALI requires allocation of package discounts in proportionate with standard prices of package elements, while most Hotel define a standard rates for package allocations. However there are practical difficulties in following this strictly,
Service Charge Recognition as revenue
- GAAP and USALI recommends that compulsory service charge collected form guest should be recognized as income
- Many hotels practice to recognize even compulsory service charge as balance sheet item instead of Income to avoid paying management fee on this part.
Non-Alcoholic Beverages as food revenue
- Many hotels put it as beverage revenue and create systems to transfer costs based on recipe from Food to Beverage.
Long term Equipment rental as Non-operating income
- Its usual to charge these items to normal hotel operating expenses which affects profitability and also management fee calculations. an Example of such costs can be long term copy machine rentals / car rentals
Other Non Compliances of USALI
- USALI requires material and labor to be recorded separately while many hotels combine the costs affecting labour cost % to income.
- Operating equipment policies are not defined (it can be fixed asset / inventory etc)
If you wish to learn and Master USALI you can subscribe to following courses
Have a look at this video for more information.