Uniform System of Accounts for the Lodging Industry: 12th Edition Changes

The Uniform System of Accounts for the Lodging Industry, known as USALI, is the standardized financial reporting framework that hotels worldwide use to organize their statements, allocate costs, and calculate performance metrics. It is now in its 12th revised edition, with a mandatory adoption date of January 1, 2026.¹ First published in 1926 by the Hotel Association of New York City, the system gives owners, operators, lenders, and investors a common language, so a boutique property in Portland and a 2,000-room convention hotel in Las Vegas can be compared on the same terms.

The Summary Operating Statement

The Summary Operating Statement is the centerpiece of USALI reporting. It walks from total revenue down to the bottom line in a fixed sequence that isolates each layer of profitability, and it is issued in two versions: one for operators, one for owners.² The flow works like this:

Operating Revenue captures rooms, food and beverage, other operated departments, and miscellaneous income.
Departmental Expenses cover the direct costs of each revenue center, subtracted to produce Total Departmental Profit.
Undistributed Operating Expenses cover property-wide overhead such as administration, sales, IT, and maintenance, subtracted to reach Gross Operating Profit (GOP).
Management Fees are deducted from GOP to reach Income Before Non-Operating Income and Expenses.
Non-Operating Income and Expenses include rent, property taxes, and insurance, subtracted to produce EBITDA.

For operators, the statement continues to a Replacement Reserve line for future capital needs, ending at EBITDA Less Replacement Reserve. For owners, it flows further through interest, depreciation, amortization, and income taxes to reach Net Income.² Operators care about the cash the business can throw off; owners need the full picture after debt service and taxes.

Beyond the Summary Operating Statement, USALI prescribes formats for a Balance Sheet, a Statement of Owner’s Equity tracking capital contributions and distributions, and a Statement of Cash Flows covering operating, investing, and financing activities.

Departmental Schedules

Each revenue-generating area of a hotel has its own detailed schedule. The Rooms schedule captures all guest-stay income and deducts direct costs such as housekeeping labor and front-desk operations. The Food and Beverage schedule subtracts cost of goods sold and service labor from gross sales to arrive at departmental profit. Spas, parking, gift shops, and similar revenue streams each get a separate schedule under Other Operated Departments.

The 12th edition made several schedule-level changes that reflect how hotels actually run today. Mini bar revenue and expenses moved out of Food and Beverage into Other Operated Departments, since most properties treat mini bars as a separate cost center. Executive Lounges now have their own subschedule where lounge operations generate meaningful revenue and expense. In-room entertainment systems shifted from the Rooms schedule to the Information and Telecommunications Systems schedule, acknowledging that streaming platforms and smart-TV management are technology costs.³

Undistributed Operating Expenses

Not every cost belongs to a single department. Expenses required to keep the whole property running are grouped into undistributed categories so they don’t distort the profitability of individual revenue centers. Under USALI, these categories are:

Administrative and General, covering executive salaries, office supplies, legal fees, and similar overhead.
Information and Telecommunications Systems, covering property management software, guest internet, and in-room entertainment.
Sales and Marketing, covering advertising, promotions, loyalty program costs, and the digital marketing subcategories added in the 12th edition (paid search, display, and social).
Property Operations and Maintenance, covering repairs, preventive maintenance, and facilities upkeep.
Energy, Water, and Waste, formerly called Utilities, significantly expanded in the 12th edition.

Labor costs are allocated to the department or undistributed category where the work happens. A housekeeper’s wages hit the Rooms schedule; an IT technician’s salary hits Information and Telecommunications Systems. The 12th edition added a standalone Full-Time Equivalents schedule (Schedule 15) that measures employee hours across every department, making staffing easier to benchmark against comparable properties.³

Standardized Operating Metrics

USALI does more than organize statements. It standardizes the formulas behind the metrics that drive pricing decisions, lender covenants, and management contracts.

Average Daily Rate

Average Daily Rate (ADR) equals total rooms revenue divided by the number of rooms sold. Complimentary rooms and staff-occupied rooms are excluded from the count.⁴ ADR shows what guests actually pay per night, which makes it the most direct measure of a property’s pricing power against its competitors.

Revenue Per Available Room

Revenue Per Available Room (RevPAR) can be calculated two ways: multiply ADR by the occupancy rate, or divide total rooms revenue by the total number of available rooms.⁵ RevPAR captures pricing and demand in a single number. A hotel could have a high ADR with low occupancy, or the reverse; RevPAR forces both into the same equation. The denominator excludes rooms taken out of inventory for extended renovations, preventing a property in the middle of a major capital project from looking artificially efficient.

Gross Operating Profit Per Available Room

GOPPAR goes deeper than RevPAR by pulling in every operating revenue source and subtracting every operating expense. Divide Gross Operating Profit by total available rooms and you have it. Because GOP includes food and beverage, spa, parking, and every other revenue line minus all departmental and undistributed costs, GOPPAR shows how much operating profit the property generates per room in inventory. Two hotels can post identical RevPAR figures and wildly different GOPPARs depending on how well each controls costs.

Why the Standard Matters in Management Contracts

These metrics aren’t only benchmarking tools. In most hotel management agreements, they operate as contractual triggers that can end the relationship between an owner and an operator. A typical performance test has two prongs, both of which must fail before the owner can act:

A RevPAR prong measuring the hotel against a defined competitive set, with roughly 90 percent of that set’s average as a common failure threshold.
A GOP prong comparing actual Gross Operating Profit to the annual budget, with a miss of more than about 10 percent triggering failure.

Both prongs generally must fail, often in consecutive years, before termination rights arise. Even then, most agreements give the operator a cure right, letting them cover the shortfall with a cash payment rather than lose the contract.⁶ Performance tests are typically suspended during force majeure events, major renovations, ramp-up periods for new hotels, and situations where the owner has failed to provide required working capital. The consistency of USALI definitions is what makes these provisions enforceable. Without a shared standard for calculating RevPAR or GOP, every dispute would begin with an argument about the math.

Relationship to GAAP

A common misconception is that USALI itself is a set of accounting principles. It isn’t. The system is designed to be consistent with U.S. Generally Accepted Accounting Principles and references International Financial Reporting Standards, but it doesn’t define or replace either. USALI sits as a layer on top of GAAP, telling you how to present and categorize hotel financial data within a GAAP-compliant framework, not how to recognize revenue or measure assets. Properties outside the United States should note that local accounting requirements may differ from the U.S. standards USALI’s formats follow.²

Terms like Gross Operating Profit and EBITDA Less Replacement Reserve are non-GAAP measures defined by USALI for internal management and benchmarking.⁷ External financial statements prepared for lenders or investors still need to comply with GAAP or IFRS on their own, and USALI’s supplementary schedules and metrics exist alongside that compliance rather than substituting for it.

What Changed in the 12th Edition

The 12th revised edition was published in 2023 with a mandatory adoption date of January 1, 2026.⁸ The most visible change is the expansion of the old Utilities schedule into a new Energy, Water, and Waste (EWW) schedule. Waste removal expenses moved out of Property Operations and Maintenance, and both energy and water reporting gained more detailed accounts and dedicated metrics to support sustainability benchmarking.⁹ Hotels can now report environmental performance to customers, investors, and regulators in a format consistent across properties.

Other notable updates:

Loyalty program costs now have three new line items: member benefits, points earned from purchases, and promotional point campaigns. Service recovery points used to resolve guest complaints are tracked separately under Administrative and General.
Sales and Marketing gained dedicated expense lines for paid search, display advertising, and social media, along with new job titles such as digital marketing manager and social media coordinator.
A new annual schedule (Schedule 16) consolidates all mandatory brand and operator fees in one place, making franchise and management costs easier to compare across properties.
What was previously “Resort Fees” is now “Destination, Resort, and Urban Fees,” and a new cleaning fees line captures the cost of pet and smoking damage.
Rent expense and Balance Sheet treatment were revised to align with current U.S. GAAP and IFRS lease standards.
Preopening expenses were added as a cost category within non-operating expenses.

Properties reporting under the 11th edition may adopt the 12th early, but every property must be reporting under the new standard by January 2026.⁸

Where to Get the Manual

The 12th edition is available through HFTP in several formats. A digital monthly subscription is $8 and includes access to both the 12th and 11th edition e-books. Annual subscriptions cost $80, and a five-year subscription is $200. Physical soft-cover copies are $129 for HFTP members and $149 for nonmembers, with each purchase including a two-year digital subscription. Bulk digital pricing for organizations needing multiple logins starts at $1,200 for 10 users over five years.⁸

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HFTP. The USALI 12th Revised Edition, An Expert Overview of the Updates
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Investopedia. Understanding Average Daily Rate (ADR)
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CoStar. What is Revenue per Available Room (RevPAR)? And How to Calculate It
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Pryor Cashman. Hospitality Performance Tests: Fool’s Gold?
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