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USALI 12th Revised Edition, Deep Dive: Annual Mandatory Brand and Operator Costs – Schedule 16

USALI 12th Revised Edition, Deep Dive: Annual Mandatory Brand and Operator Costs - Schedule 16

Just released, the Uniform System of Accounts for the Lodging Industry (USALI) 12th Revised Edition has been meticulously updated by the Global Finance Committee (GFC) with guiding principles to enhance transparency in reporting, broaden data sets to better inform decision-making, and align with contemporary practices.

To support its release, GFC members are also presenting a series of webinars. Be sure to register for the monthly “USALI 12th Revised Edition, Deep Dive” webinars running through September 2024. Accompanying the webinars are correlating blog posts, including this one which precedes the webinar “USALI 12th Revised Edition: Payroll FTE – Schedule 15 and Annual Mandatory Brand and Operator Costs – Schedule 16 taking place on August 8 at 11:00 a.m. CDT. This blog post covers the Annual Mandatory Brand and Operator Cost Schedule (16).

Hotel owners frequently engage a management company (operator) to operate their hotel. Further, hotel owners or operators will engage a brand to provide marketing and reservation services. Sometimes the brand provides operator services, as well.

The definition of an operator and brand are as follows:

Purpose

Historically, the majority of fees could be recorded in a few major categories within the operating statement:

Over the years, the services provided by brands and operators have expanded into the areas of technology, training, purchasing, employee recruiting, and payroll processing, usually to promote or maintain standards and often at a lower cost than a single property could achieve due to economies of scale. The brands and operators charge for these reimbursable expenses, and the costs are recorded across multiple applicable departments.

The Annual Mandatory Brand and Operator Cost — Schedule16 has been developed for the USALI 12th Revised Edition to capture all these expenses in one easily viewable table. Only costs that are mandatory are included in Schedule 16. Optional services ordered by the owner, and pass-through expenses (e.g., travel agent commissions, business intelligence reports) should not be included in Schedule 16.

Structure of Schedule 16

Schedule 16 is divided into four sub-categories. The expense titles within each sub-category are also provided.

Rooms:

Sales and Marketing:

Information and Technology:

Programs, Systems and Services:

Expenses are presented both on a total annual dollars and percent of total operating revenue basis. Discrete columns are presented for current and prior year data for both the operator and the brand, and in total.

It should be noted that the expense categories presented in Schedule 16 may not be compatible to similarly titled classifications in the operating statement, and therefore should not be relied upon for benchmarking purposes.

Bundled Expenses

Brands and operators often combine reservation, marketing, central information system, and administrative support assessments into bundled program charges. In this circumstance, the preparer should seek guidance from the brand or operator regarding the estimated allocation of the bundled program charges across the designated sub-categories. If such guidance is not available, the unallocated bundled program charges should be recorded in the Franchise and Marketing Expense category within the Sales and Marketing department.

Use of Schedule 16

Schedule 16 should be prepared once a year when all the associated costs have been tabulated. Because the definition and extent of services provided by brands and operators differ significantly, Schedule 16 should not be used to compare and benchmark costs amongst brands and operators.

The USALI is a leading publication with operational information pertinent to the lodging industry. The most current edition is available for purchase as a hard copy book or as a digital subscription. First published in 1926, the primary purpose of this publication is to offer operating statements formatted to provide hotel owners, managers and other interested parties with operational information pertinent to the lodging industry. Learn more at usali.hftp.org.

Posted by on July 31, 2024.

Categories: Association

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