Author's Note
I would like to share with my readers the intent of these blog articles and what I wanted to achieve with them.
Having spent 50 years in the hotel industry experiencing a variety of finance related roles, one area where I believe there has been little progress is the guidance available to enable users of hotel management information to fully understand what they are reading and how to interpret it.
There are books on hotel accounting but they are largely relevant to understand bookkeeping principles as applied to the requirements of hotels. It is many years since a book identifying the special aspects of auditing hotel businesses was published.
In the intervening period, the separation of ownership from operation of hotels has increased the complexity of interpreting and reconciling operational statements with financial accounts. The tasks of ensuring compliance with the provisions of management contracts, leases with rents geared to turnover, financing covenants and various commercial agreements reflecting obligations relating to the property and brand ownership have become more onerous.
Users within hotel management as well as external users need an understanding of the nature of the business, its key performance metrics, terminology, accounting and reporting practices. Those training as managers in the industry and those teaching or learning about hospitality management in colleges and universities have similar needs.
My aim is to contribute to the resources for guidance on these subjects, and to attempt to address the subject for readers whatever their backgrounds or levels of technical skills. I offer guidance rather than rules. Even when hotels claim to have adopted industry standards, it will be found that they have interpreted them in their own ways. National and International considerations also impact how standards are applied locally.
My viewpoint is biased towards UK standards, but as these are widely applied internationally my observations should be relevant to other locations.
Why do this now ?
The key standard for toe format and content of hotel operating statements that has existed for many years, and is gaining worldwide adoption, is the Uniform System of Accounts for the Lodging Industry. The USALI provides a basis against which other alternatives can by compared. The latest edition of the USALI, the Eleventh Revised Edition, was published in 2014. For hotel operating statements to be considered to conform with the USALI standards, a requirement of many modern agreements, hotels should have applied the changes in this edition as from 1 January 2015.
Auditors and others who are reviewing hotel operating statements for 2015 should by now be using this edition of the USALI as their reference for standards.
Why use blog articles to write about the subject ?
To write a full guide would take a long time to complete and publish. Blog articles can address the subject in bite sized sections written over a period of time. The intent of the series is to cover the full scope by the end of 2016. After this is the possibility of editing, refining and compiling a comprehensive version, perhaps as an e-book.
In the meantime, some repetition, (hopefully minor) editing errors, backtracking, and general meandering might occur, for which apologies are offered.
Please take the opportunity to give feedback and ask questions arising from the blog articles.
The blog series is available on the ICAEW Tourism and Hospitality web site, HOSPA web site and LinkedIn. HFJUN2016