It is today called the Uniform System of Accounts for the Lodging Industry, commonly referred to as USALI. It was born as USAH [1] in the United States of America, more precisely in New York in 1926 by the local Hotels Association. There was a need to have a specific accounting system for the hospitality sector, which would facilitate a comparative analysis, between different operations and hotel departments.
In this way, the quality of management within the sector itself could be assessed through a common language. In a few months, it goes from local to national, and in 1996 to include other forms of accommodation, it becomes the denomination now known as USALI.
Currently, in its 11th edition (2014), is the result of collaboration between three entities, the New York Hotel Association, the American Hotel & Lodging Educational Institute (AHLEI) and the Hospitality Financial and Technology Professionals. However, only AHLEI is responsible for its updating.
The USALI system contains a widely tested, globally recognized accounting and analytical model [2].
What is accounting for?
Accounting is the main source of financial and economic information of an entity, allowing the the company to organize information, measuring the assets, providing data to the competent authorities (Finance, Social Security, etc.), establishing plan control, planning strategies, budgeting , pricing (sales, purchase, Cost of Goods Sold and Materials Consumed) among many other things.
The information collected by the accounts must be comprehensible to those stakeholders who wish to analyze and evaluate them.
The main essential qualities of the financial statements are:
- Understandable for the users
- Relevant
- Reliable
- Comparable
- Convenient (shape and time)
Currently in Portugal, it is mandatory to use the accounting standardization system (SNC). However, the SNC does not allow the hotelier to have a view of all the data needed for effective management, since it focuses on the economic magnitudes in a global way. The use of a less general model that encompasses the specific characteristics of the sector, focusing more on management accounting, is of value to the hotel industry managers. In this way, accounting becomes an asset to all hotel departments, beyond the hotel general administration department.
We can point out the following specific characteristics:
- Perishable nature of the product / service
- The intangibility of the service
- Production and consumption simultaneity
- Heterogeneity
- Seasonality
- High Fixed Costs
- Labor intensity [3]
In addition to these factors we have to take into account the increasing competitiveness where the hotel properties operate, often acting globally, which implies a need for managers to respond to the needs of their clients effectively.
All these characteristics make hotel properties management very complex and very competitive. It is necessary to anticipate the needs of clients which presupposes that they use the best accounting and management systems for effective and efficient decision making [4].
Will it be an asset to apply the USALI system in your property?
We point out some of the advantages that can aid in the decision to implement:
- Comparability
- Uniformity
- Flexibility and ease of adaptation
- Management by responsibilities
- Departmental Accountability
- Benchmarking tool
- Detailed Performance Information
- Colletcing information unable to get from PMS [5]
USALI will enable the classification, organization and presentation of financial information in a uniform and consistent manner, thus improving user comprehensibility [6].
But what does this mean for you as a property manager?
You will be able to compare the results of hotels (for example within a hotel chain) in a comparative way, regardless of the market in which it is inserted, its size or the management model adopted. Only this way can you understand what stage you are in and what changes you will have to implement, creating guidelines for your management.
- Answering questions like:
Your hotel has services like laundry, restaurant, message service, among others. Of course, these services, besides generating revenues, also generate maintenance costs.
- To what extent is it advantageous to maintain these services?
- Which one is most attractive at the management level?
- Which of them adds value to clients perception, even if it is not profitable?
All these questions are very pertinent today, and an accounting system that can answer these questions is vitally important to the survival of the property. It becomes more and more important to bet in management accounting increasingly closed, and which allows all departments to be updated.
Authors:
This article was written in coautorship by Susana Castro and Ivete Pinto
