A standard accounting package produces an accurate P&L, but it groups costs by type rather than by department. Most independent hotels already work around that, rebuilding the departmental view by hand each month alongside the accounts. Hotels solved the underlying problem a hundred years ago with a reporting standard called USALI, which makes that view fall out of the ledger itself and makes it comparable to other hotels. This series is about how it works at an independent’s scale.
What does a standard P&L actually tell you?
Start with what your current accounts do well, because they do it genuinely well.
Your accounts package, whether that’s Sage, Xero, QuickBooks or something your accountant prefers, produces a P&L in which every euro is captured. Revenue at the top. Costs grouped beneath it: wages, cost of sales, light and heat, insurance, repairs, marketing. A profit figure at the bottom that ties back to the ledger, the VAT returns and, eventually, the statutory accounts.
If the question is “did we account for everything correctly?”, the answer is yes. Your accountant has done the job right, with the format the software gave them.
The problem is that “did we account for everything?” is not the question that runs a hotel.
Why can’t a standard P&L show departmental profit?
Because of how the chart of accounts is organised. A standard chart of accounts groups costs by type: all wages in one place, all utilities in one place, all purchases in one place. That structure was designed for businesses that are, at heart, one business.
A hotel is not one business. It is several businesses trading under one roof, with completely different economics:
- A rooms business, where the product is perishable, the cost of an extra sale is small, and margins are high.
- A food and beverage business, with purchase costs, kitchen payroll, wastage and margins closer to a restaurant’s than to a hotel’s.
- Often a spa, leisure centre, golf course or events operation, each with its own cost base.
The Irish Hotels Federation’s February 2025 member survey made the point sharply for this market: hotels under 100 rooms lean more heavily on food and beverage revenue than larger properties, which means more of the typical Irish independent’s business sits in its lowest-margin department.
Flatten those businesses into one cost-type P&L and something specific is lost. Your P&L can state total wages to the euro. It cannot tell you the restaurant’s share of those wages. It can state utilities precisely. It cannot say what the kitchen consumed. So the most basic management question in the industry, “did food and beverage make money last month?”, has no answer on that page.
So it gets answered somewhere else. In most independent hotels there is a spreadsheet alongside the accounts where the departmental view is rebuilt each month, and it is usually careful work by someone who knows the hotel well. The cost is not the quality of that work. It is that the view sits outside the ledger, has to be rebuilt every month, and is structured to one hotel’s own logic rather than to a shared one. The information was in the ledger all along. The format just was not built to surface it.
What do hotel groups do differently?
In 1926, hotel operators in New York faced exactly this problem and wrote their own standard: the Uniform System of Accounts for the Lodging Industry, or USALI. It is published today by HFTP (Hospitality Financial and Technology Professionals), it reached its 12th edition at the end of 2024, and it turns one hundred this year. Nearly every hotel group in the world reports with it.
The core idea has not changed in a century: a hotel’s profit comes from its departments, so the statement is built from departments.
At a high level, the shape looks like this:
- Each operating department reports its own revenue, its own payroll, its own costs and its own profit line. Rooms has a departmental profit. Food and beverage has a departmental profit.
- Costs that belong to no single department, such as administration, sales and marketing, and energy, sit separately as undistributed costs. No department gets blamed for them.
- Departmental profits, less undistributed costs, give Gross Operating Profit: GOP, the number the entire industry manages to.
The reasoning behind uniformity matters as much as the structure. As HFTP puts it, differences in how hotels classify revenue and allocate expenses distort comparisons and hinder decision-making. One agreed shape means the numbers mean the same thing in every hotel. We will come back to why that matters enormously for independents.
What does the difference look like in practice?
Here is an illustrative month for a fictional 60-room Irish hotel with a busy food operation. The figures are invented for demonstration; the pattern is one we see repeatedly in real hotels.
The standard P&L says:
| Standard format (extract) | € |
|---|---|
| Total revenue | 410,000 |
| Wages and salaries | (152,000) |
| Cost of sales | (48,000) |
| Light, heat and power | (18,000) |
| Other operating costs | (96,000) |
| Operating profit | 96,000 |
A profit of €96,000 on €410,000. Fine month. Nothing to discuss.
The same month, hotel-shaped:
| Departmental view (illustrative) | Revenue € | Costs € | Profit € | Margin |
|---|---|---|---|---|
| Rooms | 250,000 | (75,000) | 175,000 | 70% |
| Food & beverage | 145,000 | (104,000) | 41,000 | 28% |
| Other operated | 15,000 | (9,000) | 6,000 | 40% |
| Undistributed costs | (126,000) | (126,000) | ||
| Gross Operating Profit | 410,000 | 96,000 | 23% |
Same ledger. Same €96,000. An entirely different conversation.
Because now the questions ask themselves. Rooms turns €250,000 of revenue into €175,000 of departmental profit, a 70% margin. Food and beverage turns €145,000 into €41,000, at 28%. Neither figure is alarming for what it is. But a euro of room revenue is worth roughly two and a half times a euro of food revenue by the time each reaches the bottom of its own department, and the food operation is the one consuming the most labour and the most management attention. Is 28% right for this hotel, or is there a pricing problem, a payroll problem, or simply what F&B delivers here? Is it improving or deteriorating? What would a peer hotel’s food margin look like?
The standard P&L cannot even provoke those questions. The departmental one cannot avoid them.
We wrote previously about what EBITDAR margin a hotel should achieve; every figure in that discussion presumes this departmental structure underneath.
What does this change for the person who builds it today?
It takes the monthly rebuild away from them, and this point matters: none of this is a criticism of your accountant or of whoever puts that departmental view together each month. They have been producing correct accounts in the format the software provides, then reconstructing the departmental picture on top of it. The gap is structural, not personal.
The information needed for a departmental P&L already exists in your ledger, in the invoices, payroll runs and revenue postings your team records every day. What changes is the structure those transactions map into. Get the chart of accounts right once, and the departmental view falls out of the ledger month after month, without a side spreadsheet. That is a design job, done once, not a monthly burden. Part 3 of this series covers it in detail.
It is fair to say the standard has a reputation for heaviness. Academic research bears this out: a 2025 systematic review in the International Journal of Hospitality Management found that while chain hotels benefit from full USALI adoption, smaller independent hotels struggle with the system’s complexity and resource demands, and that no simplified version for smaller hotels exists. That gap is precisely why this series exists: to translate the standard, in plain English, at the scale of a 40-plus room independent.
One honest caveat belongs here. Adopting the approach does not require anyone’s permission, but the standard itself is copyrighted work. This series explains the concepts in our own words and deliberately stops short of reproducing the book. For the authoritative text, buy the 12th edition from HFTP; in the UK and Ireland you can also purchase it through HOSPA, the hospitality finance professionals’ association.
Why should an independent bother?
Three reasons, in ascending order of importance.
First, decisions. Departmental profit is where operational decisions live: menu pricing, rostering, whether the spa earns its space. When those numbers come straight out of the ledger rather than out of a parallel spreadsheet, the decisions get argued from the same figures the accounts are built on, and nobody has to reconcile two versions first.
Second, credibility. Lenders, investors and any future buyer of your hotel read USALI-shaped accounts as standard. Owner reporting that follows the industry’s structure answers questions before they are asked.
Third, and this is where the series is heading: comparability. A departmental view built to the industry’s standard structure can be set against other hotels line by line. A departmental view built to your own logic cannot, however careful the work behind it. This is how groups manage 40 properties at once: every property reports in the same shape, so the group can rank them line by line and ask why. Comparability is a capability you build, not a report you buy, and the building starts with the structure of your P&L.
If seeing your hotel the way a group financial director sees theirs sounds worth having, that is the conversation we are here for. Talk to us about making your hotel’s reporting benchmark-ready.
Where this series goes next
This is Part 1 of a series: USALI for independent hotels, from the general ledger up. The next chapter covers the foundations properly: the departmental structure, undistributed costs, GOP, and why the standard scales down to an independent far better than its reputation suggests. Later chapters work through the chart of accounts, each department in turn, the statistics your PMS should feed into the monthly pack, and what “benchmark-ready” actually means.
Three questions to sit with until then:
- Can your current monthly P&L show food and beverage profit on its own, without a side spreadsheet?
- If your rooms margin and your food margin moved in opposite directions last quarter, would the accounts have told you?
- And if a comparable hotel down the road runs a materially better GOP, how would you find out?
If the honest answer to any of these is “it can’t” or “we wouldn’t”, the format is the problem, not your team. Talk to us about making your hotel’s reporting benchmark-ready, or follow the series and build it yourself.
Colin Donovan is an accountant and the founder of SSOT Analytics, which builds USALI-aligned financial reporting for independent hotels. SSOT Analytics is independent of HFTP. USALI (the Uniform System of Accounts for the Lodging Industry) is published by HFTP: the authoritative text is the 12th edition, available at usali.hftp.org and, in the UK and Ireland, via hospa.org.