USALI 12th Edition Revised, In-depth Study: Part II All-Inclusive Hotels

USALI 12th Edition Revised, In-depth Study: Part 2 All-Inclusive Hotels – Image Source HFTP

Just released Uniform System of Accounting for the Lodging Industry (USALI) 12th Revision It has been carefully updated by the Global Finance Council (GFC) and contains guiding principles to increase reporting transparency, expand data sets to better inform decision-making, and align with contemporary practice.

To support the release of the guide, GFC members will also be hosting a series of webinars. Be sure to register for the monthly “USALI 12th Edition Revised, Deep Dive” webinars, which will run through September 2024. Webinars are accompanied by related blog posts, including this one about the webinar “USALI 12th Edition Revised, Deep Dive: Part II All-Inclusive Hotels.”

Overview

The growing demand in the all-inclusive hotel market over the past decade has prompted all-inclusive hotel owners and operators to seek guidance from the GFC. The GFC is pleased to announce that the USALI 12th Edition revision now has a section dedicated to reporting these operational results, allowing for fair benchmarking and analysis of this growing market.

When the GFC began its initial review of AI reporting, it found huge disparities from a country and company perspective, as historically many AI hotels were primarily located in the Caribbean. Therefore, an in-depth review was initiated to identify best practices that would bring the AI community together for fair benchmarking and analysis. The COVID-19 pandemic has created both challenges and opportunities, as many hotels have closed and travel has been drastically reduced. However, at the same time, the demand for AI hotels has increased, with a corresponding increase in new entrants. This has led to broader industry support to help develop this new USALI guidance—particularly grateful to leaders from Marriott, Hilton, Hyatt, Playa, Sandals, IHG, STR/Co-Star, Hotel AVE, and Cornell’s SC Johnson School of Business.

The AI reporting guidance proposed in the USALI 12th revision represents what the GFC calls AI 1.0, and the committee believes that it provides a solid foundation for bringing together the diverse AI community and building on it. More specifically, the GFC believes that AI 1.0 will evolve over time, similar to the path taken by the harmonization of accounting standards around the world, although at a much faster pace given the collaborative industry effort to develop this new AI guidance.

AI Guidance Summary

All hotels with more than 50% of total revenues from all-inclusive packages (calculated on a three-year rolling average) should use the AI reporting format provided in USALI Revision 12 (as well as newly opened hotels with more than 50% of total revenues from all-inclusive packages forecasted). In general, the AI guidance is conceptually consistent with European Program (EP) hotels, and the Summary of Operations Statement is organized into the same sections.

Unlike EP hotels, which only offer room rates and allow guests to choose to purchase food and other services (à la carte or as a package), AI hotels charge a package rate, which includes room, food and entertainment for a fixed price.

United States Army Air Force AI Hotel’s revenue consists of three categories of revenue: package revenue, non-package revenue and miscellaneous revenue, which are summarized as follows.

Package income:
- It is not allocated to each service within the guest's package, but is reported as a total.
- Reports consistent guest segmentation with EP hotels.
- Given the varying statutory requirements around the world, local reporting may require additional timelines.

Non-packaging revenue:

Various:

Operating expenses are divided into four categories, including rooms, food and beverage, entertainment, and non-package expenses. These AI programs are basically consistent with EP hotel operating expenses, but include new account definitions for AI hotel-unique accounts.

The AI consolidated operating statements include new subtotals for packaging profit, non-packaging profit, and total profit before unallocated expenses.

Non-packaging income and expenses are summarized in a separate schedule to report the non-packaging profit for each activity, which includes:

The financial ratios and metrics reported in Part II include only items that are specific to AI Hotels, primarily considering the number of hotel guests versus the number of occupied rooms. For the purposes of calculating financial ratios and operating metrics, all guests are counted equally (e.g., adults and children).

Specific AI indicators include: