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  • Stefan van Heerwaarden

Getting everything out of your administration? This is how you do it!

Strong financial base

It sounds so logical. If you build a house, you make sure you have a solid foundation. But what about your financial "foundation"? Are all the building blocks in the right place? I like to take you through that process. With a good foundation you can quickly get a clear picture of your turnover and costs. That means: more control, better results.

In my earlier blog I focused on measuring and managing key figures. If you work according to the USALI hospitality standard - the unified general ledger chart for the hotel industry - then you'll have numbers readily available. Fortunately, USALI is already familiar territory for many hoteliers. To properly fit USALI into the administration, (and then get the desired output from it), is a step further. That's where I'm going to help you! You can read all about it in this blog.

First a reminder. Also, why is USALI your "holy grail"?

USALI is indispensable for hotel managers, owners and investors. The unified financial language helps make hotel performance transparent. Managers can better manage results by department. Not only the total costs of hotel rooms, for example, are reported; you can also zoom in on detail. In a clear 'hotel income statement' you can see at a glance how the hotel is doing. Which departments are turning a profit, which are making a loss? USALI is also an important basis for stakeholders. It is referred to in all kinds of agreements, such as mortgages, franchise or management agreements.

USALI is thus leading when it comes to:

1. Insight from A to Z

Fixed ledgers, fourteen departmental schedules and clear business statistics. So you get easy insight into the performance within your hotel. Reports per month, quarter or year give you all the tools you need for budgeting and forecasting.

2. Benchmark

Uniform accounting allows you to easily compare the performance of one hotel (within your chain) with other hotels. Or compare yourself to general industry data.

3. Valuation and strategic choices

USALI provides up-to-date insight into the value of the hotel. Based on that, you make the right strategic choices and investments.

All right, we'll start with a brief explanation.

In accounting, we use fixed items. This is how you distinguish between various departments and how you can zoom in on detail. We list the most important terms again.

Department: main department, such as Food & Beverage

Segment: component, such as Leisure or Business

Outlet: sub-department, such as Restaurant, Kitchen or Bar

Category: part of subdivision, such as Beer, Wine, Soft drinks

USALI makes it easy for hotels.

USALI is set up in such a way that the same ledgers are used in different departments. Take a department like Rooms or Food & Beverage. The following ledgers appear in both departments: Linen, Utensils, Print & Stationary, Guest Supplies, Cleaning Supplies. Certain ledgers, such as Print & Stationary, are used in almost all departments of the hotel.

For salary ledgers, it is advisable - in addition to the breakdown by departments - to make a further refinement by outlets. This refinement gives you broader insight. Think of cleaning costs per room or turnover per hour worked in a restaurant or bar. Within accounting systems, this is easy to set up using cost centers. This keeps the general ledger system limited and provides direct insight into the total costs of a general ledger.

So, the ledgers are fixed. How do you classify expenses?

Using the USALI manual, it is easy to assign costs to ledgers. It describes in detail which costs fall under which specific ledger. Also use the search function: even easier! You can find which costs fall under each department. Or search the register for guest soaps, for example. There it is mentioned that these products (costs) belong in the department Rooms, under the general ledger Guest Supplies.

The next step: revenue registration!

Initial revenue recording takes place mainly outside accounting programs. Most hotels have a POS (cashier system) and a PMS (reservation system). Ideally, there is an interface between the POS and the PMS. This ensures that all recorded sales are booked from the POS to the PMS. So, then all sales are entirely in the PMS.

From the PMS, revenue journal entries (including payments) are posted daily to the accounting system.

It is important that sales ledgers and outlets correspond in all systems. This way, they are set up the same in the POS, PMS and accounting.

Rooms turnover registration

Room turnover is often budgeted daily, across different segments with different prices. For example, the hotel uses different room rates for Leisure than for Business. In practice, turnover often comes out of the PMS as a single ledger. As a result, the rooms sold cannot be traced back to segments, making it difficult to analyse differences.

It is therefore important to take segments into account when setting up a (new) PMS. You often must create duplicate booking codes for this. Segments must also be adhered to for rooms.

F & B revenue registration

For USALI, we (preferably) want sales by outlet to be transparent. For the F & B department, sales should at least be separated by Food and by Beverage. For a thorough understanding, we recommend further splitting Beverage into categories:

• Turnover coffee/tea

• Sales of soft drinks

• Beer sales

• Turnover wines

• Spirits sales

This way you can get insight into the sales per outlet (e.g., the restaurant) and what is converted in that outlet. At the same time, you can see what total Beverage or soft drinks are converted. The separation into categories within Beverage means that we can also calculate (per category) an in-store percentage. This requires creating a purchase ledger per category. The supplier can make the breakdown on your purchase invoice using the ledgers.

If a beverage inventory system is in place, even a purchasing percentage by category per outlet can be calculated. For Food sales, if separate kitchens are present, a separate food cost is possible.

Start at the beginning. Get the POS system set up properly

It is important that revenue groups in the POS system be at least equal to the ledgers that end up in the accounting system. After all, these are routed to the PMS where at least the same set of ledgers is found. If you want up-to-date and deeper insight, we recommend setting up the POS broadly, with a good breakdown by outlet and category.

Other revenue registration

Each hotel has other turnover. The MT/Management decides whether this turnover should also be transparent by ledger. In our opinion, this is particularly interesting if there is a large turnover flow, for example from wellness tickets. Or because there is a one-to-one relationship with purchasing, such as bicycle rentals. If you use both a sales and a purchase ledger, you can quickly see in the report whether the desired margins are being achieved.

How are additional business units running? Do a (mini) profit-and-loss analysis!

Hotels with a golf course, swimming pool or complete wellness want to know if these services are profitable. You get that from a (mini) profit-and-loss analysis. For this you use figures on the turnover of, for example, a golf course, F&B turnover, direct purchases and personnel costs. It provides good insight into the profitability of this activity as a whole.

CONCLUSION: Build a solid, financial foundation and align POS, PMS and accounting early on.

For insightful reporting, start with the basics. POS, PMS and accounting must be set up correctly. With USALI, this is already fairly automatic. When implementing the POS and PMS, make sure that the back office is looked at right away. We see that (in practice) it often happens afterwards. UNFORTUNATE! You miss opportunities and spend a lot of time and energy to get everything in line.

Hard work pays off! The benefits:

• Uniformity of accounting and reporting.

• Own Insight (and responsibility) for various departments.

• Performance data available in detail.

• Profitability by department/outlet.

• Benchmarking for strategic choices.

• Good valuation of the hotel.

Do you have questions or want to spar with us? Get in touch! or +31 (0)20 700 66 30.

Stefan van Heerwaarden

Owner Statler BI and ReVPAR Hospitality Consulting

Strategic solutions based on data. That means looking beyond the numbers. Sharp analysis leads to practical management of your hotel. The result? Better profit margins, satisfied owners, motivated staff and happy guests.


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