USALI explained: The standard behind hotel reporting

The average hotel manages hundreds of revenue and cost items. While allocation methods may not alter your actual profit, they can dramatically influence how performance is measured and perceived, especially when benchmarking or securing financing.

Following common accounting practices is essential for hoteliers looking to maintain financial transparency, secure funding, and benchmark their performance effectively against industry averages. 

While no single global standard exists for hospitality accounting, the Uniform System of Accounts for the Lodging Industry (USALI) is the closest thing to a widely recognized framework.

In this article, we explore the USALI standards, their most recent update, and how your hotel technology can help streamline compliance and reporting. 

USALI has been officially aligned with GAAP (Generally Accepted Accounting Principles, the accounting standard of reference in the US) since its 10th revised 2006 edition. However, it also takes a different approach in some parts to address the unique accounting challenges of the hospitality industry. 

For example, its terminology and financial statements, such as Balance Sheet, Statement of Income, and Statement of Cash Flows, align with GAAP, but its Summary Operating Statements include items such as property taxes, insurance costs and replacement reserves, and terminology—Gross Operating Profit and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) less Replacement Reserve—that are not GAAP-based but can be useful for internal management and comparisons.

Why USALI matters for hotels

Common accounting standards like USALI benefit hotels in several ways: 

1. Financial uniformity 

Hotel groups and management companies can make true performance comparisons between properties with different characteristics, market segments, and geographical locations. 

Without this standardization, it would be difficult to determine whether financial differences are caused by different performances or accounting inconsistencies. An effective group-wide comparison allows management to identify and extend best practices from successful properties or address underperformance with targeted interventions.

2. Meaningful benchmarking

The standardization of key operating metrics like RevPAR, labor cost percentages, and departmental profit margins allows hotels to compare their performance with industry averages, competitive sets, and market data sources such as STR Global. These valuable business insights help set realistic targets and identify strengths and weaknesses for strategic decisions.

3. Clear financial visibility

Unlike generic accounting systems, USALI provides granular, line-item insights across departments (rooms, F&B, spa, etc.), highlighting success areas and those needing investment or operational changes.

4. Easier access to financing 

Lenders and investors rely on clear, standardized financial reports when assessing risk and valuation. USALI’s standardized framework reduces information asymmetry, boosts investor confidence, streamlines due diligence, and can lead to better financing terms.

USALI governance and recent updates 

USALI is maintained and revised by the Global Finance Committee, jointly sponsored by Hospitality Financial and Technology Professionals (HFTP) and the American Hotel & Lodging Association (AHLA).

The financial management committee includes lodging industry professionals from different areas, such as hotel owners, asset managers, hospitality management companies, educational institutes, and hotel finance professionals. Recent updates have expanded its international representation to make USALI evolve from US-centric to a standard for the lodging industry worldwide.

The new 12th edition was published in 2024 and will come into effect on January 1st, 2026. The revised edition will continue to be aligned with GAAP, also addressing non-U.S. standards, such as the International Financial Reporting Standards (IFRS). 

The revisions from the 11th edition to the new edition reflect the evolving nature of revenue streams and expense categories of modern hotel operations and include: 

Improved sustainability reporting

The former “Utilities” department has been overhauled and renamed “Energy, Water, and Waste.” The new section introduces comprehensive KPIs for tracking not just utility costs, but actual consumption metrics in terms of kilowatt hours, liters of water, or how much of a hotel’s energy is obtained from renewable sources. This update was driven by the growing interest of corporate clients, tour operators, and investors in sustainable properties.

Focus on all-inclusive hotels 

A dedicated section recognizes all-inclusive resorts’ unique operating model. Key changes include specific guidance on package revenue segmentation and new revenue categories specific to the all-inclusive market.

Labor cost transparency 

A supplemental financial report breaks down labor costs and staffing levels by department and role, helping owners understand labor policies, identify improvement areas, and calculate FTEs (Full-Time Equivalents). 

FTE is a more reliable metric for measuring labor and comparing staffing levels. If, for a given role, hotel A employs five people full-time and hotel B employs ten people part-time, the FTE will be the same.

Brand/operator cost reporting

A new schedule tracks mandatory fees charged back by management companies and brands, improving transparency in budget planning. In an intro to the new USALI edition, Giuliano Gasparin, Head of Hospitality Asset Management, WASL Group, described this as one of the major changes. 

For example, when hotel employees lose passwords for operator platforms, they often must call costly support numbers, sometimes $25 per call. These are significant “hidden costs” that are typically not factored into management agreement negotiations but can quickly accumulate. The new schedule will make these costs more transparent.

USALI and your PMS

While USALI provides a gold standard for hotel accounting, it’s not automatically reflected in many PMS or POS systems. That’s because vendors aren’t required to follow USALI guidelines, meaning the responsibility to align reporting often falls on your hotel’s finance team. 

This misalignment creates friction. For example, a PMS might classify early check-in fees, late check-outs, or cancellation charges as “room revenue.” Under USALI, however, these items should be recorded as “Other Operated Departments Revenue” or “Miscellaneous Income.” The difference may seem small, but it can meaningfully distort your key performance indicators, such as ADR and total revenue.

Without native USALI support, finance teams must manually extract, reclassify, and reformat financial data, introducing inefficiencies, increasing the risk of errors, and slowing down month-end closing or loan application processes.

A PMS that considers USALI principles from the start eliminates this disconnect. It ensures financial data is categorized correctly, automates compliance with reporting standards, and enables cleaner integration with downstream accounting software. For hotels operating across multiple locations or seeking external funding, this level of precision isn’t just a nice-to-have—it’s a competitive advantage.

What to look for in a PMS 

Considering the importance of accounting reporting, these are the key features to look for in a PMS:

Alignment with USALI. A system that automatically assigns transactions to the correct USALI accounts will reduce manual entry errors and save staff time while ensuring compliance with industry standards.

Flexible reporting. Some hotels have unique revenue streams, cost centers, or ownership structures that require custom financial reporting beyond USALI standards. Your PMS should allow custom report generation that serves your business needs rather than forcing operations to conform to rigid templates.

Audit trails and immutability. A PMS with unalterable transaction histories and verifiable records will provide accountability and transparency to all stakeholders.

Direct data transfer with accounting systems. The ability to export USALI financial data directly to your accounting software eliminates the need for manual data re-entry, prevents discrepancies, and accelerates month-end closing

Smarter hotel accounting aligning PMS to USALI

As hotels face growing demands for financial transparency, performance benchmarking, and sustainability reporting, aligning internal systems with industry standards like USALI is more important than ever.

Cloudbeds is built with USALI in mind, helping hotels make smarter decisions, access capital faster, and more effectively manage multiple properties.