1. Times Change and USALI Has Now Changed With Them!
Presented by: Arlene Ramirez, MBA, CHAE, CHE
HFTP Global Vice President

2. Agenda
History of the USALI, the committee that maintains it and the process of revising it.
Examine some of the significant changes to the 11th Revised Edition of the USALI, as compared to the 10th Revised Edition, and the reasons for making the changes.
Identify how some of the changes will affect future reporting within your organization.

3. History
First edition published in 1926 and was entitled “Uniform Systems of Accounts of Hotels”
First system of accounts in lodging industry and possibly first effort for any industry at the time
Produced by the Hotel Association of New York
In 1961 the American Hotel & Lodging Association (AH&LA) appointed the National Association of Accountants to develop a uniform system for small hotels and motels

4. History…. Book was revised in 1979 and then again in 1986
In 1996 a decision was made to combine both books and for the publication to be named “Uniform System of Accounts for the Lodging Industry”(USALI)
November 2011 the process began to update the 10th Edition
The latest version will be effective January 1, 2015

5. Purpose
“to provide operating statements that are formatted to provide hotel owners, managers and other interested parties with information and data that are pertinent to the unique operating environment of the lodging industry.”

6. Who Makes Changes Hotel Association of New York AH&LA HFTP Copyright
Financial Management Committee
Education Institute
HFTP
Sponsor

7. FMC Members Individual Hotel Owners Hotel Chains Educators
Public Accounting
Smith Travel Research / PKF Consulting
Owner Representatives / Asset Managers
Management Companies
Consultants

8. Owner / Asset Managers Kim Gauthier, Thayer Lodging Group
Craig Mason, Host Hotels
Howard Issacson, RLJ Lodging Trust
Michelle Russo, Hotel AVE
Larry Kaminsky, LaSalle Hotels
Ray Martz, Pebblebrook
Chad Crandell, CHM Hotels
Jeff Carter, CW Capital
Mike Denicola, Felcor
Vicki Richman, HVS Hotel Management

9. Brands & Management Companies
Marriott
Four Seasons
Starwood
Peabody Hotels
Hyatt
Inntegrated Hospitality Management
Fairmont
Carlson Hotels
JHM Hotels
The Temling Group

10. Considerations
Intended to be consistent with US Generally Accepted Accounting Principles (GAAP)
To increase applicability worldwide some language has been adjusted so it is more global in nature
Due to references in many industry contracts and documents, the 11th Edition must be followed in order to be “in conformity with USALI”

11. Changes Practices Industry Practices •Accounting Practice Technology
Cluster Services
Sustainability
Distribution Channels
Globalization
Ratio Analysis
New Terminology
•Accounting Practice
IFRS
GAAP

12. Summary Operating Statement
Operating Revenue
Rooms
Food and Beverage
Other Operated Departments
Miscellaneous Income
Total Operating Revenue
Used to be Misc. Income

13. Summary Operating Statement
Undistributed Operating Expenses
Administrative and General
Information and Telecommunications Systems
Sales and Marketing
Property Operations and Maintenance
Utilities
Total Undistributed Expenses
Gross Operating Profit
Management Fees
Income Before Non-Operating Income and Expenses
Used to be Fixed Charges

14. Summary Operating Statement
Non-Operating Income and Expenses
Income
Rent
Property and Other Taxes
Insurance
Other
Total Non-Operating Income and Expenses
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
Less: Replacement Reserve
EBITDA Less Replacement Reserve
Used to be Net Income

15. Two Statements For Operators For Owner’s
Ends with EBITDA less Replacement Reserve
For Owner’s
Deducts Interest, Depreciation and Amortization
Ends with Net Income

16. Owners Ending
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization)
Interest, Depreciation, and Amortization
Interest
Depreciation
Amortization
Total Interest, Depreciation and Amortization
Income Before Income Taxes
Income Taxes
Net Income

17. Multiple Departments Payroll Costs to Labor Costs
Outsourced Labor recognized
Aggregated Salaries and Wages for Management and Non- Management are presented in department schedules
Service Charge Distribution is presented as a cost category
Global approach taken with payroll tax and benefit categories
Expat benefit categories added

18. Labor Reporting Labor Costs and Related Expenses
Salaries, Wages, Contracted Labor and Bonuses
Salaries and Wages
Management
Non-Management
Sub-Categories as needed
Sub-Total: Salaries and Wages
Service Charge Distribution
Contracted, Leased or Outsourced Labor
Bonuses and Incentives
Total Salaries, Wages, Service Charges, Contracted Labor and Bonuses
Payroll-Related Expenses
Payroll Taxes
Supplemental Pay
Employee Benefits
Total Payroll Related Expenses
Total Labor Costs and Related Expenses

19. Multiple Departments Gross versus Net applications (section added)
Treatment of mandatory service charges, surcharges and gratuities
A new expense category added for Cluster Services
Department specific Reservation Expenses are charged to appropriate operating department
All administrative telecommunications expenses are recorded in the Information and Telecommunications Systems department

20. Operating Departments
Room Revenue Segmentation
Package Revenue language clarified and package breakage treatment addressed
Resort Fees moved to Misc. Income
Rebates/subsidies for groups moved to a Contra Revenue account versus being a commissions
Additional Complimentary Services and Gifts expense category
F&B
In-Room/Media Entertainment
Mixed Ownership guidance

21. Rooms Segmentation

22. Service Charges

23. Food and Beverage Combined Food and Beverage Operations
Audio Visual revenue recognition expanded
Public Room set-up charges added
Gift certificate revenue recognition expanded
Cover Customer
Changes in some expense categories

24. Food and Beverage

25. Gift Certificates
Included in Miscellaneous Other Revenue are unused or forfeited deposits related to gift certificates that are not otherwise required to be escheated to the state or local jurisdiction, or un- presented and expired prepaid food and beverage coupons. Only the discounted value of the prepaid food and beverage coupons not redeemed, or the amount not required to be escheated to the state or local jurisdiction should be recorded as revenue.

26. Telecommunications No longer an Other Operated Department.
Revenues and cost of sales moved to “Guest Communication” in Minor Operated Departments.
Cost of administrative phone calls and internet connectivity moved to new “Information and Telecommunications Systems” department.
Cost of complimentary phone calls and internet connectivity moved to new “Information and Telecommunications Systems” department.
All other telecommunications related expenses (labor, maintenance, operating supplies) moved to new “Information and Telecommunications Systems” department.

27. Miscellaneous Income
Department name changed from Rentals and Other Income to Miscellaneous Income.
Items recorded here:
Unused or forfeited Gift Cards or Gift Certificates, and un-presented or expired Prepaid Coupons
Unused revenue from a package
The entire amount of a mandatory resort fee
Additional guidance provided regarding the definitions for Commissions, Business Interruption Insurance, Foreign Currency Exchange and Interest Income

28. Undistributed Departments
Information & Telecommunication Systems
Consolidate all hotel expenses associated for information and telecommunication systems to provide better line of sight cost management
Includes cost of cell phones, administrative call and internet services, and complimentary call and internet services.
System expenses categorized by type of technology or by area benefiting from technology solution

29. Undistributed Expenses
Additional guidance regarding the handling of Foreign Currency Exchange income and expenses.
Eliminated segregation of Sales and Marketing expenses.
Clarified Revenue Management and Catering Sales Functions as Sales and Marketing expenses.
Utility Taxes was eliminated as a separate expense category in the Utilities Department.
Contract Services was added as an expense category in the Utilities Department.

30. Non-Operating Income and Expenses
“Fixed Charges Section”.
Changed title from “Rent, Property & Other Taxes and Insurance” to reflect that there are other items affecting the property income statement that are not from hotel operations.
Revenue includes income from other parts of the facility that are not controlled or directed by hotel operations, such as interest income, antenna or billboard leases.

31. Non-Operating Income and Expenses
Added category for owner specific expenses associated with the property not related to operations including asset manager fees and unrealized foreign exchange gains and losses.
Added clarification that rent of buildings used for employee housing should be included herein. However, rent reimbursement to employees and the cost of operating employee housing is a Payroll Related Benefit.

32. Non-Operating Income and Expenses

33. Summary Financial Statements
Included statement of comprehensive income which replaces income statement
Included reference to International Financial Reporting Standards (IFRS)
Included gift certificates and cards in current liability section
Expanded explanation of inventories
Expanded explanation of operating equipment
Included explanation of pre-opening expenses
Section 3 illustrates a statement of comprehensive income

34. Other Sections Financial Ratios and Operating Metrics
Expanded
Cover changed to Customer
Utility Ratios expanded
Foundation laid for tracking hotel’s environmental impact
Revenue and Expense Guide
Revenue Guide added
Sortable and searchable format