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Mining A Hotel's Operating Statement

When preparing the first edition of the Uniform System of Accounts for Hotels in 1926, the Hotel Association of New York City set out to establish a uniform “responsibility accounting system” for the lodging industry.

Jump in Hotel Labor Costs Are Concern in 2008

As hotels struggle with declining occupancy and below average ADR growth in 2008, the U.S. lodging industry now looks back fondly at 2007.

Strong Hotels Will Wait for Next Up Cycle to Sell

In 2008 it is evident that liquidity in the hotel ownership market has been drastically reduced, RevPAR expectations have been revised downward, and transactions have considerably slowed.

Investment Returns on Select-Service Hotels, Free Drives RevPAR

The great investment return that the limited-service segment can provide is probably the worst kept secret in the hospitality business.

Bills Affecting Hotels Stall in Congress

Although it looks unlikely that Congress will move this year on immigration and other bills that impact the hotel industry, the good news is that the industry could benefit from tax rebates.

Hotel Operators Massage Profits from Spas

Spa profits increased greater than the average growth for all departments

It is commonly understood that spas were once an afterthought for operators of hotels and resorts. Yet as living a healthy and better lifestyle has become one of the population's top priorities, spas have grown in popularity and are viewed as essential elements to a hotel or resort's success rather than being just a luxury.

2008 Looks Brighter for Meetings Market

PKF Research Says Meeting Planners Resigned To Seller’s Market, Hotel Managers in Good Negotiation Position

Given the strength of the U.S. lodging market, it is no surprise that meeting planners appear to have accepted the fact that it is a seller’s market. Meeting planners have not abandoned their efforts to control their budgets. However, rising room rates, attrition clauses, and second-tier cities are no longer the “hot button” issues they once were.

Yes, the improving fiscal health of corporations and associations has put less pressure on meeting planners to curb their costs. However, based on our analysis of the attitude of meeting planners, as well as our discussions with hotel sales personnel, the expected shift in bargaining power from buyer to seller is well in evidence in 2007.

Uniform System of Accounts for the Lodging Industry, 10th Edition

Editor's Note: The USALI is the standard for hotel accounting.  Hotel owners, operators, accountants, consultants, analysts, educators, attorneys, lenders, and investors all rely on it as the “common language” for hotel financial statements and statistics. This article that discusses recent guideline changes has been added to the franchise encyclopedia as a resource for lodging owners and staff.

Major Changes of 10th Edition

The Financial Management Committee of the American Hotel and Lodging Association (AH&LA), in conjunction with the Hospitality Financial and Technology Professionals (HFTP), published the tenth edition of the Uniform System of Accounts for the Lodging Industry (USALI) in the fall of 2006.  The first edition of the USALI was published in 1926 by the Hotel Association of New York City.  The purpose of the first USALI was to establish a uniform responsibility accounting system for the lodging industry.

Do Hotels Need to Sell More?

October Research Shows Need To Capture More Dollars Per Room Instead of Selling More Nights

As the industry enters what is projected to be an extended period of moderate, yet sustained growth for the next few years, expect to see the investment in unit-level marketing expenditures start to level off.  Historically, marketing expenses grow at a greater pace than total revenue during recessionary periods and the following years of recovery.  Industry owners and operators realize the need to “spend money in order to make money.”

Conversely, we have observed that the annual growth in marketing department expenditures tends to revert to the long-term average of 2.7 percent during periods of prosperity.  During the past few years, we have seen the annual investment in marketing drop from 6.1 percent in 2004 to 4.3 percent in 2006.  The result has been a gradual decline in the ratio of marketing expenses to total revenue from 4.7 percent in 2004 to 4.5 percent in 2006.

Hotel Revenue Gains Overcome Expense Growth

A familiar pattern repeated itself in 2006 – strong gains in hotel revenues surpassed significant expense growth, which resulted in double-digit increases in unit level hotel profits. In 2006, the average hotel manager in our Trends in the Hotel Industry survey achieved a 13.3 percent gain in operating profits, the third consecutive year of bottom-line increases in excess of ten percent. Favorable supply / demand conditions allowed these operators to enjoy an 8.2 percent jump in revenues for the year. However, management continued to struggle with burgeoning costs. Hotel operating expenses grew 6.3 percent in 2006, the third consecutive year of expense growth nearly twice the pace of inflation.