USALI, the Uniform System of Accounts for the Lodging Industry, standardizes the reporting system for the hotel industry, providing guidelines for organized accounting and determining what is considered “above or under the line.” The “line” refers to Gross Operating Profit (GOP), a key performance indicator that measures a hotel operator’s performance. Hotel operators are responsible for operating costs allocated above the GOP.
Since hotel operators receive an incentive of the GOP, it is in their best interest to reduce operational costs. USALI helps define what counts as an operational expense to avoid misunderstandings. However, the allocation of staff accommodation has caused some disputes between hotel owners and operators.
USALI is heavily influenced by American hotel brands and may not be suitable for all countries or jurisdictions. In some countries, staff accommodation is part of the salary and benefits package, leading to varying interpretations of where to allocate these expenses.
It logically states that if accommodation is provided by the hotel, which in countries such as USA, is allocated as a rent assumed by the hotel, then the cost of such accommodation should be treated as a non-operational cost and therefore shall be allocated below the GOP.
This sounds normal right?. Well, it is not that simple in other jurisdictions or countries.
In some countries, specially those with a large expat community, the staff accommodation is part of the salary and benefits package. The interpretation here varies. In this case, where do you allocate these expenses?.
From one side, it is considered as part of the salary but on the other the hotel is paying a lease to a landlord to accommodate their staff. Should we consider this expense above the GOP or below the GOP?.
Talking to some hotel asset managers peers, everybody has come to a different solution. From my perspective is extremely simple. USALI has not thought outside of America or Europe, where staff accommodation as part of the package is rarely implemented.
If it is part of the culture to provide staff accommodation as an important part of the salary package, then the discussion of allocation should be extremely simple. It should be considered in the salary/benefits line. Hence, it will affect the GOP of a hotel and therefore decrease the incentive fees of the Hotel Operator.
